Retirement Annuities

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snoozee

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Hi
I have a retirement annuity with PPS (and a tiny old one with Sanlam that I probably cannot move), and only contribute once a year in January, as an annual payment. I was wondering, with the arrival of Sygnia and 10x, whether it makes sense to this year open a new RA at one of those, and contribute there? From a tax deduction perspective there's no difference, but is there any disadvantage in having multiple RAs when it comes to retirement or so? Or is it wise to spread the risk into multiple baskets even with RAs?

Secondly, with Liberty I understand from my broker that I don't pay any advisory fees or so on the policy - but the underlying funds probably smash me. Is there any way that one can actually find out what those charges are?

Thanks!
 
what I would do:
Spread it for safety. One day when you retire you can bring it all together if you so wish.
 
10X and Sygnia both use index-tracking (unless you use Sygnia's specialist funds), so they'll likely have a large overlap in the underlying assets.

As far as I know there's no disadvantage to having several RAs, except for a bit more paperwork.

Can't answer about Liberty. As a rule, I avoid insurance companies when it comes to investments. You'll have to contact them probably.
 
The disadvantage would lie purely in the costs of the currents funds.

It’s worth moving away (as I’m doing from Old Mutual slowly) if the costs are significantly less.

2% seems like nothing now but it amounts to something like -60% at retirement age capital balance.

As it stands the very nature of RA regulations already diversifies your portfolios to a large degree and you’ll find lots of overlap inside those restrictions.

So the costs would be my only concern ultimately.
 
Please avoid insurance companies and RA’s, they WILL screw you with their small print later.

You could quite easily move your RA from Sanlam (but with a penalty, see above warning) using a section 14 transfer. I’ve done this twice owing to my stupidity getting RA’s with Liberty and Discovery when I was younger.
I couldn’t be happier with Coronation.
 
I wouldn't get any RA from any Life Insurer (Old Mutual, Sanlam, Momentum, Liberty), there are enough thread and articles on the internet about how expensive they are.

You can ask for quotes for moving your existing RA and for making it paid up (maybe there is a cost or maybe they have recovered their costs and there won't be a cost). Once you have that information you can decide if it's worth it to move them or not.

Open RA with provider of choice (10X, Sygnia ,Coronation, Allan Gray etc) with the fund/s of choice (their balanced fund or your own Regulation 28 compliant collection of unit trusts).
 
Thanks very much everyone. Agreed - wouldn't go to the life insurers for new policies. Was just wondering if I'd be making a mistake just leaving those policies where they are and starting a new one at Sygnia or Coronation etc, so thanks for the comments!

Might also be in my interest to move the Liberty policy elsewhere at this stage - although it seems near impossible to find out what the charges actually are. Will drop them an email today and see how things go.
 
snoozee said:
Thanks very much everyone. Agreed - wouldn't go to the life insurers for new policies. Was just wondering if I'd be making a mistake just leaving those policies where they are and starting a new one at Sygnia or Coronation etc, so thanks for the comments!

Might also be in my interest to move the Liberty policy elsewhere at this stage - although it seems near impossible to find out what the charges actually are. Will drop them an email today and see how things go.
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Go do a cost calculation over 20 years and you’ll very quickly realise it’s a mistake to leave them there.

Also if the RA has been there a few years it will most likely transfer cost free.
 
That's the thing - only started it in Feb 2012, and only paying in annual lump sums - so it'll probably still incur a penalty. Might be worth asking though. Let's see what I manage.

And yup - compounding effect of fees is big - just no idea what exactly the fees amount to!
 
snoozee said:
That's the thing - only started it in Feb 2012, and only paying in annual lump sums - so it'll probably still incur a penalty. Might be worth asking though. Let's see what I manage.

And yup - compounding effect of fees is big - just no idea what exactly the fees amount to!
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Yup doesn’t hurt to ask.

I seem to recall 5 years as the period that applies before moving cost free.

And even then it might be inconsequential even if there is a cost.
 
The power of an RA is the cumulative interest on interest earned as you save and the investments (hopefully) yield a good return.

Taking the interest on interest out of the equation might set you back if spread out over several RA's.

Then again, I'm not a financial broker or have any experience with this.

However, piece of advice, move your Sanlam RA to something different, if it's less than 9k you can cash it out, but you will pay tax on it. However you can legally move it, regardless of amount, to any other RA facility you want.
 
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That's a snapshot from Liberty. What a crazy Admin fee!! Madness! And who knows why the negative - their comments below barely make any sense trying to explain the various lines!
 
envo said:
The power of an RA is the cumulative interest on interest earned as you save and the investments (hopefully) yield a good return.

Taking the interest on interest out of the equation might set you back if spread out over several RA's.

Then again, I'm not a financial broker or have any experience with this.

However, piece of advice, move your Sanlam RA to something different, if it's less than 9k you can cash it out, but you will pay tax on it. However you can legally move it, regardless of amount, to any other RA facility you want.
Click to expand...

They interest on interest thing (aka compounding) is inaccurate. 5 x R20 in 5 accounts will earn same interest amount in total as R100 in 1 account (assuming R0 cost and same interest rate).

Anyway, having a few RAs can be good when retiring, you can annuitise the ones you need to while letting ones you dont need then to keep growing until you want to use them.
 
snoozee said:
That's a snapshot from Liberty. What a crazy Admin fee!! Madness! And who knows why the negative - their comments below barely make any sense trying to explain the various lines!
Click to expand...

The negative seems some kind of discount then. 3% isnt high for Liberty from what I’ve seen, but 2% is too high personally for me. Less than 1.5% for managed and under 1% for index funds for me thanks.
 
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