8 Good Reasons why you should have a Retirement Annuity
1. Contributions tax deductible up to
a. 15% of non-retirement funding taxable income, or
b. R3500 minus allowable pension fund contributions, or
2. During the investment term savings within retirement funds is not taxed.
3. Tax treatment of one third cash lump sum of retirement annuity proceeds.
a. Tax free portion: R300 000 plus contributions made to retirement funds which were previously disallowed as a deduction.
b. Less tax-free portions of retirement funds already utilized
4. Two thirds of retirement annuity proceeds to purchase a compulsory annuity.
a. Wide choice of annuity options
b. Can be guaranteed for a fixed term, or
c. Guaranteed income for life
d. Taxable as income
5. Protected against claims from creditors – with certain exceptions.
6. Protected in case of emigration – the remittal of retirement annuities must always take place with the approval of the exchange control annuities.
7. Investors have the option to increase contributions to combat the effect of inflation.
8. A retirement annuity allows disciplined savings for retirement and is also ideal for self-employed persons or small businesses.