RA - Retirement annuity

D

D3x!

Banned
Joined
Jul 18, 2010
Messages
18,616
Reaction score
12
Location
pew pew pew
Hey all,

So I must look into getting an RA, not only for the tax benefit but also for the future.

But I don't know where to start

1.) Can anyone recommend a broker JHB based or a company, old mutual, sanlam investec etc etc
2.) Is there any benefit in speaking to your employer about it, i.e if they make a contribution to it does it actually cost them anything or a tax write off etc

Have other questions but will ask the broker/company

Thanks
 
Whereabouts are you? I have a decent FA I can refer...
 
D3x! said:
Hey all,

So I must look into getting an RA, not only for the tax benefit but also for the future.

But I don't know where to start

1.) Can anyone recommend a broker JHB based or a company, old mutual, sanlam investec etc etc
2.) Is there any benefit in speaking to your employer about it, i.e if they make a contribution to it does it actually cost them anything or a tax write off etc

Have other questions but will ask the broker/company

Thanks
Click to expand...

Hey,


I work for Brenthurst Wealth in JHB, (Fourways) and we specialise in Financial advice with regards to RA's and discretionary investments amongst others.

www.bwm.co.za and our number is 011-799-8100

or inbox me and I can give you more details, will gladly assist.
 
D3x! said:
Hey all,

So I must look into getting an RA, not only for the tax benefit but also for the future.

But I don't know where to start

1.) Can anyone recommend a broker JHB based or a company, old mutual, sanlam investec etc etc
2.) Is there any benefit in speaking to your employer about it, i.e if they make a contribution to it does it actually cost them anything or a tax write off etc

Have other questions but will ask the broker/company

Thanks
Click to expand...

What is the tax benefit of RA's that everyone goes on about?
 
etwylite said:
What is the tax benefit of RA's that everyone goes on about?
Click to expand...

well i only heard today and havent yet verified its accuracy (not that I am saying the posting wasnt accurate) but apparently for every R3k you put into an RA you get a tax deduction of close to R1000
 
Yes thats correct but I fail to see how what is effectively a tax deferment is considered a benefit.

Youre locked in till at least age 55, returns are generally lower than other financial instruments, fees higher. And at the end you can only take out 1/3 max with a tax free portion of 300k and the balance taxed at your last marginal rate which will probably be your highest.

Personally i think there are better more flexible investments, so perhaps have a chat with a good FA and be openminded.
all the best
 
etwylite said:
Yes thats correct but I fail to see how what is effectively a tax deferment is considered a benefit.

Youre locked in till at least age 55, returns are generally lower than other financial instruments, fees higher. And at the end you can only take out 1/3 max with a tax free portion of 300k and the balance taxed at your last marginal rate which will probably be your highest.

Personally i think there are better more flexible investments, so perhaps have a chat with a good FA and be openminded.
all the best
Click to expand...

thanks for the insight, seriously.
 
etwylite said:
Yes thats correct but I fail to see how what is effectively a tax deferment is considered a benefit.

Youre locked in till at least age 55, returns are generally lower than other financial instruments, fees higher. And at the end you can only take out 1/3 max with a tax free portion of 300k and the balance taxed at your last marginal rate which will probably be your highest.

Personally i think there are better more flexible investments, so perhaps have a chat with a good FA and be openminded.
all the best
Click to expand...

The new unit trust based RAs (allan gray, coronation and whomever else) are much more flexible, so you can structure them to get good performance as your risk appetite allows. Stay away from life assurance based RAs, really high fees and penalties.

As said in the link you provided, it provides protection against yourself (from "wasteful" spending) and creditors. No one can take your money (except for fees).

Also the returns/growth (dividends and interest) are not taxed so you can get great compounding growth (if underlying funds are correctly chosen) and its good option if you are investing at the limits of your work provided pension fund or self imployed. The current 300k limit will also likely be much higher in 20 years.

Best would be a fee based Financial Advisor to assist you in choosing a strategy that suit your needs.
 
RA's in South Africa are a flipping waste of money IMO.
The RiY (Reduction in Yield) due to admin fees are among the highest in the world.

The lid was first lifted on the high costs of industry savings products by independent actuary Rob Rusconi in 2004. His research showed that the high costs of life assurance retirement annuities (RAs) could reduce your final retirement benefit by almost 50 percent.
Click to expand...

Source: http://www.iol.co.za/business/perso.../sa-retirement-products-very-pricey-1.1299907
 
supersunbird said:
The new unit trust based RAs (allan gray, coronation and whomever else) are much more flexible, so you can structure them to get good performance as your risk appetite allows. Stay away from life assurance based RAs, really high fees and penalties.

As said in the link you provided, it provides protection against yourself (from "wasteful" spending) and creditors. No one can take your money (except for fees).

Also the returns/growth (dividends and interest) are not taxed so you can get great compounding growth (if underlying funds are correctly chosen) and its good option if you are investing at the limits of your work provided pension fund or self imployed. The current 300k limit will also likely be much higher in 20 years.

Best would be a fee based Financial Advisor to assist you in choosing a strategy that suit your needs.
Click to expand...

Sorry to derail the thread; I started a RA over 5 years ago and haven't heard from my financial adviser since then. I've been managing it myself. Is there any way that I can ask that he be removed as financial adviser from my RA, seeing as he hasn't done anything since submitting the application forms for me (AFAIK financial advisers are legally obligated to contact you at least once a year to discuss the investment).
 
As usual there are a lot of myths being perpetuated regarding RAs. There are numerous threads already with detailed info. But nonetheless let me add a few things now:

1) The tax benefits are significant. Currently you may contribute 15% (going up to 22.5%) of your income and receive a tax rebate (The rules are different if you have a pension or provident fund). Simple example is that you earn R10 000 per month and contribute R1500 towards an RA. Instead of paying tax on R10 000 you only pay on R8500. As mentioned above the growth on investments is also not taxed. Then the biggie is you may have R315 000 (not 300 000) as a tax free lump sum at retirement.

2) At retirement you may take up to one third as a lump sum and the rest is used to buy you a monthly annuity (various options here). You will then be taxed on your income as per the tax tables.

3) The new generation of RAs are significantly cheaper. The IOL article by Bruce Cameron is full of holes and misleading.

4) RAs are very useful for self-employed people or others who do not have the option of belonging to a pension or provident fund at work.
 
Highly recommend Allan Gray. Don't waste time with financial advisers, just put what you can afford into one. Do it sooner rather than later.
 
Freshy-ZN said:
As opposed to what you cant afford? What a nonsense statement.
Click to expand...

I think it's more of put the most of what you can afford in.
Like I can afford R100, but I can also afford R2000..

Anyways.. my vote is for Allan Gray as well..
 
hyperian said:
Sorry to derail the thread; I started a RA over 5 years ago and haven't heard from my financial adviser since then. I've been managing it myself. Is there any way that I can ask that he be removed as financial adviser from my RA, seeing as he hasn't done anything since submitting the application forms for me (AFAIK financial advisers are legally obligated to contact you at least once a year to discuss the investment).
Click to expand...

Yes you can!
Contact the company the RA is with and they can will advise how to do it.
 
etwylite said:
Yes thats correct but I fail to see how what is effectively a tax deferment is considered a benefit.

Youre locked in till at least age 55, returns are generally lower than other financial instruments, fees higher. And at the end you can only take out 1/3 max with a tax free portion of 300k and the balance taxed at your last marginal rate which will probably be your highest.

Personally i think there are better more flexible investments, so perhaps have a chat with a good FA and be openminded.
all the best
Click to expand...

What he said.
 
Don't get one of those contract based RA's... get a unit trust based one, it may be slightly more expensive, but vastly more flexible.
 
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X