Living Annuities

Income provider for Life
 
 
Living Annuities
 
 

What is a Living Annuity ?

 

A living annuity is where your income is generated from when you retire. You can retire anything from the age of 55  and onwards.

When you have the option to retire from a pension fund or a provident fund or a retirement annuity, you can invest the amount you cannot access, that means the  2/3rd’s or whole amount into a Living Annuity, a life Annuity or into a Guaranteed Annuity.

 

The rules of pension funds, retirement preservation funds, retirement annuity funds, regulates that you can take up to 1/3 of the funds in cash, but the other 2/3rd's must be invested into a Living Annuity, Life Annuity or Guaranteed Living Annuity, that will provide you with a monthly retirement income.

 

 How will my income be determined when I retire:

 

On Living you can withdrawal from 2.5% to 17.5% of the fund value per year.

The withdrawal rate will be determined by the following

-         - How much is the fund worth.

-         - How much do I need?

-         - What is the expected growth rate at policy anniversary?

-         - How does my future income stream look like?

-         - What is my intension with my funds when I retire?

-         - My income can be changed every year on policy anniversary.

-         - How long will I live?

 

Withdrawing to much can cause trouble as my future income can drop because the growth rate was to little.

Drawing to little may not allow me to pay my obligations.

 

It is advisable that a financial advisor assist you in this process.

 

 What happens to my Living Annuity when I die?

 

When you die on a traditional Living Annuity your beneficiaries have the choice of withdrawing the full Investment Value or the income, as you did.

  

Tax on my income from a Living Annuity, Life Annuity and Guaranteed Annuity

 

You are taxed on your total income according to your tax rate determined by SARS

 

How much tax will I be paying on my withdrawal amount or the 1/3rd

 

Up to R500 000:0% of taxable income

 R500 001 to R700 000:18% of taxable income above R500 000

 R700 001 to R1050 000:R36 000 + 27% of taxable income above 700 000

 R1050 001 and above:R130 500 + 36% of taxable income above R10500 000

 

How much tax do I pay on pension or provident funds when I resign

 

Up to R25 000:0% of taxable income

 R25 001 to R660 000:18% of taxable income above R25 000

 R660 001 to R990 000:R114 300 + 27% of taxable income above R660 000

 R990 001 and above:R203 400 + 36% of taxable income above R990 000

 

B) From a Provident Fund

 

All the funds can be withdrawn to buy different retirement products, but;

 

Income Tax will be paid on the same way as with a pension fund or a retirement annuity.

 

The income might differ and payments that was not deducted for a income tax deduction may be deducted on retirement to determine your tax payable.

 

The Benefit of earning an Income from a Annuity

 

- Living annuities fall outside your estate for estate duty and executor’s fees purposes.

 - You can determine your income from your investment growth every year.

  

Risks involved with a Living Annuity

  

- You Investment your Pension Funds or retirement annuity funds into funds at the insurer of choice.

 - The decision on which funds is used for your investment by u and us.

 - Funds can be changed during the year, depending on the market conditions at that stage.

 - You fund choices is determined by your retirement strategy with us.

  

Funds Used for your Annuity

  

With our Living Annuity Suppliers we can give you a choice of over 300 funds including the following:

  

All Liberty Funds

 All Momentum Funds

 All Discovery Funds

 All Sanlam Funds

 Allan Gray Equity

 Allan Gray Balance

 Coronation Balanced Plus

 Coronation Equity

 Old Mutual Rainmaker

  

How do I start to invest in our Living Annuity?

 

Step 1: Complete our easy form on the right. It will give us most of the information we need to give you a quote.

Step 2: We will contact you for strategy information.

Step 3: We will provide you with the quotes, that will suite your objective the best.

Step 4: We will contact you to discuss them and visit you if possible.

Step 5: We will complete your application form online and send it to you to sign or when we visit you.

Step 6: You send it back and we will start the process.

Step 8:You will also be contacted yearly to review the percentage payment you receive plus we wil regularly review the fund growth rates.

 

Thank you and hope we will have a very long term relationship as you enjoy your retirement.

 

Annuity Glossary

 

Fixed / Life annuity

 

Increases: No annual increase. However, you have an option to choose a flat annual increase, eg 3%, 5% or 10%. This will reduce the initial income you receive. Pension is paid for as long as you are alive.

 Advantages: If no annual increase is chosen, the initial pension is higher. The pension is paid for life. You can opt for your spouse to receive a pension when you pass away.

 Disadvantages: Income doesn't increase unless chosen -- therefore it doesn't keep up with inflation. You are not able to adjust your income level as time goes by.

 

Living annuity

 

Increases: You decide on the level of income you need to get every year with a financial adviser (within 2,5% and 17,5% of the investment value).

 Advantages: Flexibility. You decide where to invest your money and you choose your own income level.

 Disadvantages: You carry the risk of poor market performance --no guarantees. There is a risk of outliving your money. This is the risk of living much longer than expected and drawing too much income early on.

Living Annuity Request
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