Is it really worth having a pension/provident fund?

RonSwanson

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We certainly do not agree.

Edit: How exactly did you come to the conclusion "we agree" on the post of mine you quoted? :unsure:
I mistakenly assumed that you are rational. My sincerest apologies for my assumption.
 

Splinter

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Compulsory arrangements, where BEE / AA pension fund partners such as Alexander Fukyous are roped in, holding a whole company ransom to their useless performance.
Then that would be the company's fault.
 

air

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Aai. I know you will never run out of clones, but when will you gain some self-respect?
I don't believe RS is CR - I do remember CR from the page88 days of many moons ago.
@CR - crazy times in which we live, where do you see our ZAR going?
 

Nerfherder

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Basically deferment, you have to pay tax eventually. And then you have to use a fund that is compliant with Regulation 28 of the pension funds act (and whatever else the govt throws at it). The difference is quite a few percentage points -- for example, compare Coronation's Balanced Plus fund (14.2%) with Coronation's Top 20 fund (17.3%), the latter not suffering from pension fund regulation.
Its not really deferment though is it.

You pay less tax on the money invested now, it earns interest\dividends over the years and you don't pay tax on that. Then when it matures and you retire you pay tax at a much lower rate.
 

Cage Rattler

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I don't believe RS is CR - I do remember CR from the page88 days of many moons ago.
@CR - crazy times in which we live, where do you see our ZAR going?
Yip, the good old page88 days, I miss them .. No idea what clone refers too .. Still think USD is the place to be .. Moved all of my stuff into USD a couple of years ago .. Am obviously in fin services arena and the amount of angst is amazing in terms of holding zar.
 
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Jchan11hk

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I was in AF pension fund for 5.4 years in one employer, after that period, and looked into the return, I think I got roughly 0.5% annually or something lower...

Yes, make alternative investments is a better strategy than just entirely rely on your pension fund for your retirement.
 

supersunbird

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My company is also with Alexander Forbes, which isn't a bad investment company tbh. I will however advise you to also obtain Retirement Annunity Fund Policies from Sanlam, Old Mutual etc to add to your existing pension fund. I did it years ago and I'm not sorry, the more u save for your old age, the better. :)
This is what he should not do, he should rather get Retirement Annuities elsewhere, and definitely no policy RA, unit trust ones only.
 

Jola

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That's assuming there isn't a money grab and tax rates for pensioners aren't increased.
Dividend tax for pensioners has already been massively increased, they could do the same in other areas.
 

Jola

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Its not really deferment though is it.

You pay less tax on the money invested now, it earns interest\dividends over the years and you don't pay tax on that. Then when it matures and you retire you pay tax at a much lower rate.
In my experience the returns have been really poor.

About zero return over 9 years with a few of the majors, for example.

The tax deferment does not compensate for that.

Best policy would have been to pay full tax and to invest offshore.
 

backstreetboy

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I totally disagree with you, SANLAM is the best and with their echo bonusses, it's worth it. I've seen my growth throughout the years, u probably didn't pay your monthly installments on time, now ure salty hey???
You pay for the bonus with the fees they take. Much better to go with a lisp like Sygnia, 10x etc.
 

Jola

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Which is why if i was starting out right now i'd be hesitant to put everything in Ra (albeit due for a run.. well assume Sa doesn't score an own goal as we did in 2008/9).

I'd say ideally you need a mix of EFT and RA savings to cater for everything coming.. but keep in mind passive investment may be in for trouble when things hit the fan. So investing right now is gonna be painful either way.
Yes.

But multiple own goals seem to be in process.
 

Arzy

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I've been having this debate with myself for a while now and after doing as much research as I can stomach my final conclusion was that it depends on your view of what is going to happen to the country.

Yes, Pension/RA, do provide some tax benefit in the short term and gives you a bit more disposable income while still saving. You will eventually be paying those taxes at a lower rate on a higher amount. So its effectively a zero-sum game.

If you are very optimistic you could try to max out your R350k/27.5% allowance, toss in a TFSA and then take whatever you have spare offshore. You've thus covered your tax benefit and diversified somewhat.

A balanced view would possibly do 50/50 local and offshore, missing a portion of the tax benefit unless you really have a lot of surplus cash around.

Pessimistically though, taking into account everything that is going wrong, and if you read the likes of Johnson and Roodt you wouldn't be touching any local RA's/Pensions irrespective of the tax benefit. That's not to say you shouldn't be saving! Just don't have your money in SA, rather focus on converting what you have to USD and investing offshore as far as possible. The likes of EWC, NHI and prescribed assets along with the ANC's inability to take the hard decision's the country actually needs is not providing much comfort in the long term. If things do come right you could always bring your funds back and invest locally again and in the alternative you have reasonably liquid cash should you need to leave at short notice.
 

SauRoNZA

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My company is also with Alexander Forbes, which isn't a bad investment company tbh. I will however advise you to also obtain Retirement Annunity Fund Policies from Sanlam, Old Mutual etc to add to your existing pension fund. I did it years ago and I'm not sorry, the more u save for your old age, the better. :)
No, absolutely not this.

They aren't investment companies, they are literally resellers of other people's products and take a cut in between for no good reason at all which simply steals money away from you.

Go direct to the very funds that Sanlam and OM invest in on your behalf.
 

supersunbird

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I totally disagree with you, SANLAM is the best and with their echo bonusses, it's worth it. I've seen my growth throughout the years, u probably didn't pay your monthly installments on time, now ure salty hey???
The fees are relatively high, you are in effect paying your own bonus.

What monthly installments? My Coronation RA and 10X provident fund have grown over the years too. I use life insurers for life cover, I use investment houses for retirement savings.
 

beans100

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I totally disagree with you, SANLAM is the best and with their echo bonusses, it's worth it. I've seen my growth throughout the years, u probably didn't pay your monthly installments on time, now ure salty hey???
No surprise, here....Is there someone on this forum, you actually agrees with?
 

supersunbird

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In my experience the returns have been really poor.

About zero return over 9 years with a few of the majors, for example.

The tax deferment does not compensate for that.

Best policy would have been to pay full tax and to invest offshore.
Who were these mayors? The first 4 years and 2017 should have been decent.
 

Jola

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Who were these mayors? The first 4 years and 2017 should have been decent.
Liberty, Old Mutual, plus a few others. Have shut them all down.

But quite apart from the mediocre local returns, if you look at it in USD terms it is horrific. ANC is bankrupting all of us.
 
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