Dividend only Retirement Annuities?

[AirWolf]

Hi all

At work we have a retirement annuity from Old Mutual which grows on interest income. A colleague at work would prefer one that has dividend income instead. So is there anything good out there?

Thanks.

 

[HavocXphere]

Hi all

At work we have a retirement annuity from Old Mutual which grows on interest income. A colleague at work would prefer one that has dividend income instead. So is there anything good out there?

Thanks.

Of course he would like dividend income from his RAF...dividend income is tax exempt.

In short, its not possible. RAF payments are partially deductible...and you can't get an exemption and a deduction for the same thing.

If he wants dividends, then he should invest in Old Mutual shares...but he would lose the RAF deduction because it is not a retirement annuity anymore.

 

[Barefoot Billionaire]

The great thing about RAFs is that not only are your contributions to them tax-deductible (up to 15% of your income per tax year), but SARS doesn't currently require the RAF to pay any tax on either interest or dividends. Local dividends are tax-free anyway, so no added benefit.

If your RAF allows you to choose the underlying investment portfolio, your choice should therefore depend on your investment horizon, not tax. The more shares or equity in the portfolio, the higher the volatility of the market value of your RAF, but the higher your return over the long term.

 

[AirWolf]

For my colleague this has nothing to do with tax but rather a religious issue.

 

[Ou grote]

For my colleague this has nothing to do with tax but rather a religious issue.

They launched a few Shariah products in the last year.
Oasis Asset Managers also did.

There's also a Shariah index on the JSE - I guess there will be a few funds by now that track it.

Check their websites out or phone them