Explain: Retirement Annuity.

xrapidx said:
Yeh - they are Allan Gray branded, there are a few others, the fees seem minimal - but I'll double check - thanks for the advice.
Click to expand...

Allan Gray's minimum monthly contribution is R500 per month (per fund).
IE if u want to contribute to 2 different funds a month, its 2 x R500.
You can also switch at to paying your R500 into a different one whenever you want.

If you go down to the waterfront yourself and tell AG what you want, then you pay no financial advisor fees.

(sorry for the plug of AG, I don't work there, just have some money there)
 
Not paying financial advisor fee's :) One of the services they offer.... get a list of options, and then recommend one.
 
Here's what ABSA came back with regards to fee's:
Once off fee per premium (why is this a once off fee, but monthly):
Admin fee: 1.65%
Broker fee: 2%
VAT 0.51%
Total initial fee: 4.16%

Then, annually
Admin and advice fee: 1.25% per annum
Vat: 0.17%
Total: 1.42% p/a

175 admin fee taken annually.

There seems to be quite a lot of admin/broker fee's - does the above look normal?

I'm new at RA's, but ti me it looks like the fund needs to increase by 6%/pa just to cover the fee's?
 
xrapidx said:
Here's what ABSA came back with regards to fee's:
Once off fee per premium (why is this a once off fee, but monthly):
Admin fee: 1.65%
Broker fee: 2%
VAT 0.51%
Total initial fee: 4.16%

Then, annually
Admin and advice fee: 1.25% per annum
Vat: 0.17%
Total: 1.42% p/a

175 admin fee taken annually.

There seems to be quite a lot of admin/broker fee's - does the above look normal?

I'm new at RA's, but ti me it looks like the fund needs to increase by 6%/pa just to cover the fee's?
Click to expand...


My OM RA's had a lot of fees as well, the first two years, I basically just paid fees. :(
My contribution was R250 pm and after 4 years, my RA was worth less than my contributions.
I stopped the monthly contributions, and now I'm just going to put a yearly contribution in.

Going to start another one at Allan Gray soon, converting my UT there into a RA. Much less in the way of fees.

I don't need advice fees as I know what I want.
 
I'm pretty happy with my RA at Old Mutual... It's been growing steadily for a few years now. My monthly contribution is around R2k.
 
Yeh - I generally know what I want as well - If you do it directly with Alan Gray, are there any fee's?

I'm concerned about the monthly 4.16%, does that ever stop?
 
FarligOpptreden said:
I'm pretty happy with my RA at Old Mutual... It's been growing steadily for a few years now. My monthly contribution is around R2k.
Click to expand...

I plan on contributing a sizable chuck each month, R5000 - so I want to get the best value for money.
 
xrapidx said:
Yeh - I generally know what I want as well - If you do it directly with Alan Gray, are there any fee's?

I'm concerned about the monthly 4.16%, does that ever stop?
Click to expand...

They explain the fees on their site, gave u enough links...;)
 
Lemme go check .EDIT: Now my head hurts.

Anyone car to share what their RA is worth, and their current age. Spoke to my ex, and her's is worth 6x,xxx and she's 32.
 
Last edited:
xrapidx said:
Here's what ABSA came back with regards to fee's:
Once off fee per premium (why is this a once off fee, but monthly):
Admin fee: 1.65%
Broker fee: 2%
VAT 0.51%
Total initial fee: 4.16%


Then, annually
Admin and advice fee: 1.25% per annum
Vat: 0.17%
Total: 1.42% p/a

175 admin fee taken annually.
Click to expand...

This fee above in BLUE BOLD is a monthly fee for the life of the policy.

The RED FEE is obviously annually for the life of the policy, but imagine the policy is worth R1mil in 10 years, thats R14,200 pa of my hard earned money, i.e. 3 months contributions per year go to fee's.
 
xrapidx said:
This fee above in BLUE BOLD is a monthly fee for the life of the policy.

The RED FEE is obviously annually for the life of the policy, but imagine the policy is worth R1mil in 10 years, thats R14,200 pa of my hard earned money, i.e. 3 months contributions per year go to fee's.
Click to expand...

Would 3 months not equate to 25% ?
 
alf101 said:
Would 3 months not equate to 25% ?
Click to expand...

If the fund is worth R1,000,000 and you pay 1.5% per annum on that, its R15,000. And if you're still paying R5,000/pm into the fund, thats 3 months payments per year.

I know I obviously won't be paying R5,000/pm then, but its still a lot if you think about it.
 
Barefoot Billionaire said:
It depends on your tax (and bond situation). If you are a 40% tax payer, you effectively get 4 000 back a few months after the tax year for every R10 000 that you put into your RA - that's if you havent' used up your tax limit of only 7.5% of your pensionable salary by contributing to a company pension fund. If you are a contributing employee and you have used up your limit, you basically enjoy no further tax relief. BUT if you are self-employed or employed but not contributing to a pension fund, you should get the R4 000 for every R10 000 (just keep in mind legislation could change at any time). That's a 40% return on your money (for the first year/the tax year only).

On top of that, your investment is also exposed to the equity, property and bond markets (depending which type of underlying fund/portfolio you choose) and the potential growth that they could give you over the few decades to your retirment.

If you choose an aggressive portfolio (Allan Gray allows you at this stage to invest more than 75% in equity/shares), you could end up earning a return over the next 20 years very close to the interest you're paying on your bond. BUT there are no guarantees around the returns on your RA, only historical data (about a 100 years) and we don't know if the patterns will be repeated in future. On the other hand, if you choose to pay off your bond, you have a reasonably good idea what % of interest you'll be saving over the next year - much more certainty.

As Alf101 points out, an RA's biggest benefit is that it enforces the disclipline of staying invested until you're 55 and the certainty that you will have some income when you retire.

As you may pick up, there are many intricacies around the decision whether to save via an RA or rather pay off your bond first. Best to speak to an independent, non-commission driven financial adviser before you actually decide on an RA. Unfortunately, I'm not one and cannot help with the finer detail.
Click to expand...

I heard the limit is up to 15% of your taxable income now. Anyone able to confirm that?
 
xrapidx said:
If the fund is worth R1,000,000 and you pay 1.5% per annum on that, its R15,000. And if you're still paying R5,000/pm into the fund, thats 3 months payments per year.

I know I obviously won't be paying R5,000/pm then, but its still a lot if you think about it.
Click to expand...

Isn't that 3 months in total over the period?
It's surely not 3 out of every 12 months...
 
Ok - almost two years later... I went with ABSA purely because they promised that with their fee's the portfolio would be actively managed and properly reviewed, that was two years ago - and I haven't heard a thing... I've had promised meetings to review, and them wanting to move me to a different fund, but it never happened.

The portfolio is split across:
1. Allan Gray Balanced Fund A
2. Investec Opportunity.


a. I have put in R50,000.00
b. Fees on that is R3,831.85 (7.66%/year)
c. The fund is worth R50,076.40

I need to work out how much it would be worth if I went directly to the two companies - I think ABSA's fee's are quite high consider they haven't done much in two years.
 
Eish... so you made R76.40, minus inflation?
 
also remember that with the National Social Security becoming compulsory in a few years time (was supposed to start in 2011) employers have to deduct pension. This will hit people very hard if companies have not started making provision for it - think about getting up to 15% deducted from your salary :-(
 
xrapidx said:
Ok - almost two years later... I went with ABSA purely because they promised that with their fee's the portfolio would be actively managed and properly reviewed, that was two years ago - and I haven't heard a thing... I've had promised meetings to review, and them wanting to move me to a different fund, but it never happened.

The portfolio is split across:
1. Allan Gray Balanced Fund A
2. Investec Opportunity.


a. I have put in R50,000.00
b. Fees on that is R3,831.85 (7.66%/year)
c. The fund is worth R50,076.40

I need to work out how much it would be worth if I went directly to the two companies - I think ABSA's fee's are quite high consider they haven't done much in two years.
Click to expand...

So what your saying is you actually lost money? A 32 day notice account would have been better.
 
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X