Secure your future - Direct your tax rebate into a retirement annuity
Written by: Stian De Witt Save to Instapaper
Now that the tax year has come to a close, many individuals are anticipating significant tax rebates. Rather than hastily splurging on non-essential items, especially in an uncertain economic climate with volatile markets, consider investing along with any other bonuses or cash incentives – in a retirement annuity.
In South Africa, a pervasive lack of savings discipline persists, posing challenges for both individuals and the economy at large. Considering this weak savings culture, investing in retirement annuities emerges as a strategic choice. These vehicles offer significant advantages for long-term financial planning, including tax efficiency and potential for substantial growth and Stian De Witt, Head of Financial Planning at financial advisory firm NMG Benefits shares his reasons:
Tax deductibility: Contributions to retirement annuities are tax deductible, with limits set at R350,000 or 27.5% of the greater of remuneration or taxable income. Excess contributions can be carried forward, providing additional tax benefits in subsequent years.
Tax-free investment returns: Investment returns within retirement annuities are tax-free, including dividends, interest, and capital gains, providing a favourable environment for wealth accumulation.
Tax-free transfers: When changing employers, funds accumulated within employer-based retirement schemes can be transferred tax-free into a retirement annuity, preserving tax benefits, and enabling continued growth through investment returns.
Retirement income: At age 55, retirement annuity holders can access one-third of their savings as cash, with the remainder providing a regular income stream. While cash withdrawals may incur taxation, the remaining funds offer a reliable source of retirement income.
Investment growth: Retirement annuity funds are actively invested to facilitate accelerated growth, typically outpacing traditional savings vehicles. Investors may have access to a range of investment options tailored to their risk tolerance and financial goals.
Creditor protection: Retirement annuity funds are safeguarded from creditors under Section 37B of the Pension Funds Act, ensuring asset protection even in the event of financial difficulties.
Flexibility: Retirement annuities offer flexibility in contribution levels, allowing for adjustments to suit changing financial circumstances. Contributions can be increased, decreased, or halted as needed, while existing funds continue to grow.
Security: By automating contributions through debit orders, individuals can secure their retirement savings until age 55 or beyond, providing peace of mind and long-term financial stability.
Estate Planning: Retirement annuity funds bypass the probate process, providing expedited access to beneficiaries and ensuring timely financial support during challenging times.
Cost Efficiency: With minimum contributions starting as low as R500 to R1,000 per month or annual lump sums ranging from R10,000 to R50,000, retirement annuities offer a cost-effective means of building retirement savings.
Consult with a financial advisor who can provide guidance on maximizing the benefits of retirement annuities and achieving long-term financial security.
We’re ByDesign. Officially, we’re a full-service communications, content, public relations and digital firm categorised under the marketing, advertising and communication research industry. In real life, we’re a team of communicators who’re passionate about what we do, and love to have some fun along the way.
Latest from
- Ridha Moosa - Embracing a world of possibilities
- Heat your home without the hazards and stay warm and safe this winter
- Student smarts - Insure the things you can’t afford to replace
- Chasing dust and dreams - Advice from a rally veteran
- Your business might be small – but your liability isn’t
- You don’t need insurance… Until you do
- How ASE empowers students to own their careers
- The sound of ownership and the business behind every track
- How tech and AI are disrupting the entertainment industry
- Elite XCO rider Candice Lill chases potential, purpose, and podiums
- Warren Mkhize - From YES youth to mushroom farming success
- Zandisile Goeieman - Painting Her Own Path with Purpose and Creative Power
- Olerato Mtshweni - From volunteer to storyteller and changemaker
- Getting divorced? Here’s what happens to your Pension Fund
- Ride smart, stay strong - Phillip Buys’ blueprint for elite mountain biking
The Pulse Latest Articles
- Rethinking The Finish Line: Why BTEC Might Be The Qualification South African Learners Actually Deserve (August 15, 2025)
- Hansgrohe Reinvents The Washbasin With Avalegra (August 15, 2025)
- From Tiktok To The Karoo: New SA Initiative Reclaims Manhood Through Wilderness (August 14, 2025)
- Rode Report Expands Coverage To Include Multifamily Rental Housing (August 13, 2025)
- How Women At Steinmüller Africa Are Reshaping Industry Leadership (August 13, 2025)