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Thread: Retirement Annuity - Allan Gray?

  1. #1
    Super Grandmaster supersunbird's Avatar
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    Default Retirement Annuity - Allan Gray?

    So, with the new dividend tax coming into effect, things like retirement annuities and pension funds are not taxed with this 15% and thus your total dividend is reinvested, unlike with normal private investing (like satrix EFTs) where the dividends will be taxed and thus only part after tax reinvested (if you choose to reinvest).

    So I was wondering, what are the pitfalls with retirement annuities like the Allan Gray one? I know that you can only get the money when 55 and only then a certain part of it, that regulation 28 limits you to 75% in equities (which sucks). Is there anything else?

    I see unlike with the old style retirement annuities the fees are quite reasonable and you can stop and start contributions at will without penalties and switch between the underlying funds and do others things without attracting fees.

    Are there other funds similar to the Allan Gray Retirement Annuity and how would they be better?

    Opinions would be appreciated.

    Note: I'll be keeping my Satrix Divi and Rafi and me and employer do contribute to pension fund, the RA would be additional.
    CellC & Vodacom think its OK to charge more in middle of contracts, shows what they think of you, when your contract ends, hit their wallet

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    A big advantage with Allan Grey is that their fees are lower than most and geared to performance.

    Also there is no problem with doing your own thing and dispensing with "Financial Advisors"

    There online facilities are top notch, and their associates seem to be empowered, no "I'll have to get back to you".

    Check on Hello Peter, AG actually had a complaint in the past 12 months, then check the other financial Companies records.

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    Yeh - I'm about to do the same RE: Alan Gray, mainly for the backup retirement option.

  4. #4

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    I'd speak to someone in the know about this, or hopefully someone online is already an expert, but for what it's worth:
    Yeah there is the whole "wait till you're 55" thing which is good and bad - good 'cos it forces you to wait, bad 'cos it's less flexible than say investing in unit trusts directly. And that would be my main negative I guess - not that flexible. If you have the time, skill and courage to invest directly in shares you could outperform the RA, but Allan Grey are a good company to let do this stuff for you.
    And also, if you're already contributing to a pension fund then apparently the tax perks are less for the RA as opposed to say the RA being your sole pension fund (but please confirm the exact details with a pro).
    Coronation also have an RA but both these companies are pretty good, allow you to choose individual unit trusts and change at will I think.
    Note: I'm just an average-joe with a passing interest in financial matters, please feel free to correct me!

  5. #5
    Super Grandmaster supersunbird's Avatar
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    Thanks for all the input so far.

    I'm more a DIYerv Sepeng .
    CellC & Vodacom think its OK to charge more in middle of contracts, shows what they think of you, when your contract ends, hit their wallet

  6. #6

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    "So I was wondering, what are the pitfalls with retirement annuities like the Allan Gray one?[/B] I know that you can only get the money when 55 and only then a certain part of it, that regulation 28 limits you to 75% in equities (which sucks). Is there anything else?

    I see unlike with the old style retirement annuities the fees are quite reasonable and you can stop and start contributions at will without penalties and switch between the underlying funds and do others things without attracting fees.

    Are there other funds similar to the Allan Gray Retirement Annuity and how would they be better?"

    If one has a lump sum to invest, income funds offer slightly better yields than money markets, but not enough. Eg. AG's stable fund unit trust at 12% is good. Are RA's - AG or any other - a better alternative than unit trusts or income funds etc if one compares tax liability (now and future) and rates of return. What are the costs of the funds - i hear they can be high-ish?

    Broad suggestions/guidelines please.
    Last edited by Tigerman; 22-03-2012 at 10:13 AM. Reason: Quotation referred

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    Hi Super

    I am a professional and would like to answer just a few of your questions and some of the posts here.

    First off in terms of your pension generally the rule is 1/3 of the pension contributions are paid to you to do whatever it is that you wish to do. The 2/3 is the lump sum portion where generally you purchase a living annuity,and or reinvest it an Annuity or fund. However as stated above,this portion is not available to you to withdraw,WHY? because if you start withdrawing from this you have nothing left,and secondly, you already decided to take the 1/3 and blow it on your trip around the world unless you also reinvested this amount,so coodles to you

    It is also correct to state that the RAF or retirement annuity fund is reduced if you have a pension fund WHY?
    In your tax calculation pension funds deductions are the greater
    7.5% of pensionable salary
    or 3500 - deduction allowable by SARS
    or R1750
    This is first calculated then relates directly to the next calc
    RAF Greater of R1750 or 7.5% of non pensionable retirement

    In essence the RAF will always be less than the pension fund as above and correctly stated ,RAF should be used to prop up any shortfalls you need for retirement as well as to take full advantage of the very small tax deductions individuals receive(Not business owners)

    If you want my suggestion,A fund through allan grey,coronation or even prudential that diversifies yourself,and or is a Interest bearing money market fund will give you the ability,depending on SARS and how the fund is taxed to get the 22 800 interest special allowance.

    Myself I would look to invest the money in say The coronation Balanced fund,instead of the RAF as the tax is minimal,and the best returns over a 5 year period.

    Hope all this helps abit

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    Four Tax benefits:
    1) Currently there is a 15% (going up to 22.5%) rebate on non-pension funded income.
    2) Growth on investments within the underlying funds are not taxed
    3) At retirement the first R315 000 of the one third you are allowed to take is currently tax free
    4) If you over contribute by contributing more than the allowances mentioned in 1) above the it is carried forward each year and you could end up with a much bigger tax free allowance at retirement. This works even if you have a pension or provident fund and contribute to an RA as well- you wont see much tax relief now but at retirement you will.

    You should be throwing every spare cent at retirement savings. These days people are working 40 odd years and having to fund retirements that last up to 30 years and more. If you think you are battling now wait till retirement! RAs are very good vehicles, even my two year old twins have one

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    Default ALLAN GRAY - A NIGHTMARE FOR PENSIONERS

    TO ALL THE WONDERFUL COMMENTS..... R U 4 REAL

    MY EXPERIENCE WITH ALLAN GRAY HAS BEEN A NIGHTMARE.
    I WISH NO OTHER PENSIONER HAS TO SUFFER THE WAY I AND MY FAMILY ARE SUFFERING.

    They CUT-COPIED-PASTED on original "RULES" when they sent it to me via e-mail.
    The original 2 page document was reduced to 1/2 page "just 4 me".
    They transferred my funds from my existing fund, although i had not signed and accepted the rules, AS THEY PUT IT TO ME VIA E-MAIL - "TO SPEED THINGS UP".

    They then refused to return my funds to me when i requested it 2 days later.

    "TOO LATE" they said. its the law.
    They then delay responses to mails and refuse to return telephone messages.
    IT TOOK ME 6 MONTHS BEFORE I REALISED, THEY BEHAVE LIKE MODERN DAY PIRATES.

    I ASKED FOR THE OUMBUDSMAN THAT GOVERNS THEIR INDUSTRY - I GOT 2 E-MAILS BACK -
    1 SAID REFER TO FAIS - THE OTHER SAID REFER TO PFA.

    Its 2 years and the issue went 3 times between the FSB and the PFA... I had to refer the matter to the Public Protector.

    ALLAN GRAY RUINED THE FUTURE OF MY FAMILY.
    I HAD TO TAKE MY DAUGHTER OF 3RD YEAR OF STUDY AND MY SON HAS EVEN LOST A YEAR AT HIGH SCHOOL.
    I NEARLY LOST MY FAMILY HOME, THANK GOD FOR FAMILY AND FRIENDS.

    ANY PRODUCT IS ONLY AS GOOD AS ITS AFTER SALES SERVICE.
    IN MY OPINION - ALLAN GRAY ARE MODERN DAY PIRATES.

    I DO NOT WISH MY EXPERIENCE ON AN PENSIONER OUT THERE.
    - maybe, the people out there that are saying nice things are being paid to do so.

  10. #10

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    Can you explain in English wtf happened?

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    I requested for an investment portfolio with 2 very simple conditions.
    1. I wanted the rules of my previous funds to apply = access to 100% of investment
    2. that i would get access to my money with 30 days notice.

    The consultant stated that he would send me the necessary forms and rules and conditions.
    I received an email with the ff :
    1. application for for the AGPPF.
    2. permission for AGPPF to transfer my funds from previous fund.
    and the e-mail had an 1/2 page write up from the rules and conditions.

    Nowhere on any form did it state that I will only have access to 1/3 of my funds till i am 55....not even on the AGPPF application form.
    The rules and conditions on the e-mail was half page from the complete rules and conditions.
    the portion regarding the 1/3 withdrawal and the age 55 issue was conveniently cut out.
    I filled in the forms but did not sign the section regarding the acknowledgement the rules and choice of portfolio.

    AGPPF responded and stated that they cannot proceed with my investment as i had not acknowledged the rules and did not chose a portfolio.
    Their mail also stated that they will however proceed to transfer my funds from previous fund to them to "save time"

    When i queried the transaction 2 days later.....i was told it was too late.....my funds were now in the AGPPF.... and 1/3 -age 55 rules apply.
    AGPPF stated there is nothing they can do about it as it is the law.
    Now my hard earned funds are locked.
    THEY HAVE STOLEN THE FUTURE OF MY FAMILY AND CHILDREN.

  12. #12
    Super Grandmaster supersunbird's Avatar
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    Quote Originally Posted by 1972leos View Post
    I requested for an investment portfolio with 2 very simple conditions.
    1. I wanted the rules of my previous funds to apply = access to 100% of investment
    2. that i would get access to my money with 30 days notice.

    The consultant stated that he would send me the necessary forms and rules and conditions.
    I received an email with the ff :
    1. application for for the AGPPF.
    2. permission for AGPPF to transfer my funds from previous fund.
    and the e-mail had an 1/2 page write up from the rules and conditions.

    Nowhere on any form did it state that I will only have access to 1/3 of my funds till i am 55....not even on the AGPPF application form.
    The rules and conditions on the e-mail was half page from the complete rules and conditions.
    the portion regarding the 1/3 withdrawal and the age 55 issue was conveniently cut out.
    I filled in the forms but did not sign the section regarding the acknowledgement the rules and choice of portfolio.

    AGPPF responded and stated that they cannot proceed with my investment as i had not acknowledged the rules and did not chose a portfolio.
    Their mail also stated that they will however proceed to transfer my funds from previous fund to them to "save time"

    When i queried the transaction 2 days later.....i was told it was too late.....my funds were now in the AGPPF.... and 1/3 -age 55 rules apply.
    AGPPF stated there is nothing they can do about it as it is the law.
    Now my hard earned funds are locked.
    THEY HAVE STOLEN THE FUTURE OF MY FAMILY AND CHILDREN.
    Who advised you on going with the Preservation Fund? Obviously the investment is not suitable to one of your two stated needs (the money would be 100% available before retirement - as stated there might be restrictions from the transferring fund), but might take might longer than 30 days) and as such that advisor might be liable and you will need to go to the right ombud, the Ombud for Financial Services Providers, not the PFA, for resolution.

    http://www.allangray.co.za/Individua...ors.aspx?id=31
    When is the benefit available?

    Withdrawal (before retirement)
    The Allan Gray Preservation Funds allow for a single partial or full withdrawal of the member's value in the Fund prior to retirement, provided there are no restrictions in place from the transferring fund and subject to the requirements of legislation and the regulatory authorities.

    Retirement (after age 55) or Permanent disability prior to retirement (this must be approved by the trustees)
    The Allan Gray Pension Preservation Fund:
    A maximum of one-third of the member's value can be taken as cash. The remainder of the benefit must be used to purchase a pension-providing vehicle such as the Allan Gray Living Annuity. If the value is equal to or below R75 000 across all the Allan Gray Pension Preservation Fund investment accounts, the entire value can be taken as cash.
    The Allan Gray Provident Preservation Fund:
    The total of the member's value can be taken as cash. If only part is taken in cash, the remainder of the benefit must be used to purchase a pension-providing vehicle such as the Allan Gray Living Annuity.

    Death prior to retirement
    When a member dies, the dependants/nominees can choose to receive the death benefit as an annuity or a lump sum payment. If no dependants are found and no beneficiaries were nominated the death benefit will be paid to the deceased member's estate as a lump sum.
    CellC & Vodacom think its OK to charge more in middle of contracts, shows what they think of you, when your contract ends, hit their wallet

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    Quote Originally Posted by supersunbird View Post
    Who advised you on going with the Preservation Fund? Obviously the investment is not suitable to one of your two stated needs (the money would be 100% available before retirement - as stated there might be restrictions from the transferring fund), but might take might longer than 30 days) and as such that advisor might be liable and you will need to go to the right ombud, the Ombud for Financial Services Providers, not the PFA, for resolution.

    http://www.allangray.co.za/Individua...ors.aspx?id=31
    The consultant who answered the phone at AG stated the has got the "right product" for me.
    He stated that he will send the the necessary application forms.
    He sent appl form for AGPPF.
    Nowhere on the form are the 1/3 issue or age 55 issue mentioned.
    He also cut out these 2 conditions when he sent me the terms and conditions.

    AGPPF....stated that they matter should be referred to the PFA and FSB.
    Over the past 18 months it has been going between these 2 orgs and each state refer matter to the other.
    I went to Public Protector.
    Matter is now with FAIS ...and further delays and appeals from AGPPF.

    AG.......now you know why they do not have corporate clothing....they are scRed to cross the road.

  14. #14
    Super Grandmaster supersunbird's Avatar
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    Quote Originally Posted by 1972leos View Post
    The consultant who answered the phone at AG stated the has got the "right product" for me.
    He stated that he will send the the necessary application forms.
    He sent appl form for AGPPF.
    Nowhere on the form are the 1/3 issue or age 55 issue mentioned.
    He also cut out these 2 conditions when he sent me the terms and conditions.

    AGPPF....stated that they matter should be referred to the PFA and FSB.
    Over the past 18 months it has been going between these 2 orgs and each state refer matter to the other.
    I went to Public Protector.
    Matter is now with FAIS ...and further delays and appeals from AGPPF.

    AG.......now you know why they do not have corporate clothing....they are scRed to cross the road.
    Whenever I phoned them (or Coronation or Satrix) they always clearly state they cannot give financial advice, it's also on their website for example: http://www.allangray.co.za/findanadviser/index.aspx. I just instruct them whats to do or ask a specific question/s about their product/s and to explain it to me. They are an asset manager, not financial advisors. So I hope your complaint being investigated is that the asset manager offered you financial advice. They might have another version of the story, we only hearing your side.

    Anyway, are you 100% sure you are not in a Retirement Annuity? In the text I quoted it states you can access up too all of it the money (one time only) before you decide to retire (except if the fund you transferred from had specific rules attached). That's one of the reasons its a different product as opposed to a RA. So something seems "wrong" with the issue for sure, maybe its from your side or theirs since we only have your version of things.

    In an RA you can access NOTHING until retirement (at earliest 55) and only 1/3 in cash at retirement, rest goes to life or living annuity at retirement.


    I guess the lesson for everyone from your experience, read up a bit on the internet about what you plan to spend or invest your money on and, if possible, ask questions somewhere so you can understand whatever is not clear.

    Good luck with your issue, hope it gets resolved.
    CellC & Vodacom think its OK to charge more in middle of contracts, shows what they think of you, when your contract ends, hit their wallet

  15. #15

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    Is there any feedback as yet regarding the vote and the fees that Allan Gray will charge?

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