Cancelling a retirement annuity vs making it paid up

[Pfscelliers]

Hi guy,

I have 2 sanlam retirement annuities (ra's). They are 7 and 8 years old respectively and have combined value of R100 000 give or take.

I have decided to invest in income producing property and have come to the point where I want cancel or make paid up the ra's.

Now, my question relates to whether or not cancelling the ra's will attracy huge penalties because I vaguely remeber seeing something about a financial ombudsman on carte blanche and how he forced one of the large fsp's to pay out everything which had already been invested in the ra.

Any help? w

[brucem]

I went to the Pension Funds Adjudicator on two small RAs I had, and he ruled that they must pay me every cent, not deduct 40% as a penalty. It's free, and there's nothing to lose by trying!

[xrapidx]

Ask them for a quote?

[AcidRaZor]

According to Sanlam, "by law" they can't pay out the RA if it's more than 8k because "by law" they can't.

When you cancel/make it paid up, they will actually deduct all the admin fee's they would have made out of your monthly contributions up and till the day they would have paid you out.

So for me, 55 is the age, and I incur roughly R27k in admin fee's. I also have +- 100k in my 1 Stratus account and that would mean I only get in a litte more than 70k, that will sit there for another 30 years before they pay it out.

It would have been awesome if I could get that money, but alas. I have to eat dry bread and stay with friends/be homeless instead because the government made some law...

[Wyzak]

I went to the Pension Funds Adjudicator on two small RAs I had, and he ruled that they must pay me every cent, not deduct 40% as a penalty. It's free, and there's nothing to lose by trying!

Could you possibly elaborate on why they made such a ruling?

[VernD]

According to Sanlam, "by law" they can't pay out the RA if it's more than 8k because "by law" they can't.

That's right.

When you cancel/make it paid up, they will actually deduct all the admin fee's they would have made out of your monthly contributions up and till the day they would have paid you out.

Not exactly up until the day they would've paid you out; the duration of admin fees depends on the duration of the policy. At some stage during the policy's lifetime, they would've recouped all their fees - at that stage, most of your contribution would go towards investment.

So for me, 55 is the age, and I incur roughly R27k in admin fee's. I also have +- 100k in my 1 Stratus account and that would mean I only get in a litte more than 70k, that will sit there for another 30 years before they pay it out.

It would have been awesome if I could get that money, but alas. I have to eat dry bread and stay with friends/be homeless instead because the government made some law...

This is government protecting people from themselves. Imagine if you could just cash out your retirement savings; what would you have left at retirement?

[VernD]

Could you possibly elaborate on why they made such a ruling?

Yes please; I'm intrigued too.

[Tman*]

AFAIK you can also get the full amount before 55 should you permanently move to another country or should you become disabled.

RA's are a waste of time IMO. I have had one for the last 5 years and apart from the tax advantage ive seen minimal growth.

[Pfscelliers]

I went to the Pension Funds Adjudicator on two small RAs I had, and he ruled that they must pay me every cent, not deduct 40% as a penalty. It's free, and there's nothing to lose by trying!

Could you possibly tell me what they were worth and how recent this ruling was?

[Wyzak]

This is government protecting people from themselves. Imagine if you could just cash out your retirement savings; what would you have left at retirement?

That is understandable after a certain amount of years, but unfortunately the minimum limit is set way too low. I believe after you have invested like R5000 into the thing then you are unable to withdraw anything ever again. That is a bit retarded, if you put R500-R1000 in per month.

[Wyzak]

RA's are a waste of time IMO. I have had one for the last 5 years and apart from the tax advantage ive seen minimal growth.

I've seen negative real growth on mine. 4 years in and it has grown 2.1% which isn't even one years inflation.

[geezer]

I've seen negative real growth on mine. 4 years in and it has grown 2.1% which isn't even one years inflation.

Luckily our company's pension fund is doing very good. The last feedback we got from our Pension fund manager, the one year growth until 31 March 2012 was 14.13%, the Annualised return over 2 years to 31 March 2012 was 13.02% and the Annualised return over 3 years to 31 March 2012 was 18.9%. My pension fund grew by almost R360000 during the last tax year from March '11 - Feb '12.

[snail]

Some times it's better just to go with your own companies pension fund and make additional contriubtions each month, and if u find it aint working for you then just stop those additional payments there and then. Makes life a lot easier than going and having to contribute a set amount every month and not have an option to stop (however with paying additional lump sums into your company's 1, they still put in the normal funds so its fine).

[Freshy-ZN]

I've seen negative real growth on mine. 4 years in and it has grown 2.1% which isn't even one years inflation.

What are the underlying funds your RA is invested in?