Alexforbes acquires OUTvest
Alexforbes has acquired 100% of the shares in OUTvest, and we are proud to be a part of this leading South African financial services group.
Welcome to the OUTvest Retirement Info Hub
There are many questions relating to retirement, some of which extend beyond investments. This resource aims to answer as many retirement-related questions as possible. So, go ahead and browse below (and be sure to return, because this page is updated frequently).
All you should know about retirement
Preparations to consider with only 6 months left to retirement
Your retirement is bound to be a very stressful time as you tackle a big emotional hurdle. Walking out the door for the last time, you will have your hands full because there is much to do, including making a substantial psychological leap.
Adequacy of retirement income compared to your living standards
People approaching retirement are often deeply concerned about whether or not the income that they can expect from their investments will provide them with a similar living standard to the one they enjoyed before retiring. Not being sure of how to take stock of the situation means that it is mostly ignored.
What investment options do you have when you retire?
When you reach the point of decision at retirement, it’s easy to panic. You have to decide how to invest a large amount of money to ensure that you will receive an income for the rest of your, your spouse, or your partner’s lives. And it is unlikely that you have been prepared for this.
Annuities Living and Guaranteed
Choosing the right pension for your retirement is a serious decision. These products are complex and require proper research.
How can I ensure that my spouse or partner keeps getting a pension if I die first?
Many people who attend my retirement education courses ask how they can ensure that their pension will go to their spouse, or partner if they pass away first.
Can you combine your retirement annuities, preservation funds and pension or provident funds into the same pension?
The short answer is yes! However, there is more to this than meets the eye. Over the course of a lifetime, people can collect many bits and pieces of retirement funds that are lodged in various places. Preservation funds came into being in South Africa in 1989. They were intended as a safe haven for the money that became available from pension and/or provident funds when someone resigned from their job.
How much tax must you pay on lump sums when you retire?
When you retire from a retirement fund - be it a pension, provident or retirement annuity fund - you may take some of the money out in cash. Pension and retirement annuity funds allow you to withdraw up to one third of the value in cash, while provident funds permit you to take the full value in cash - unless you want to invest any part of the money in a pension or annuity. Preservation pension and provident funds are subject to the same rules as ordinary pension and provident funds.
How does the retirement process take place?
Employer pension and provident funds (employer retirement funds) differ from retirement annuities and preservation funds in the way that they process retiring members. The principles are the same, but the employer retirement funds tend to have more formal processes. In this article we detail the employer processes first and then discuss the practical differences as they relate to retirement annuities and preservation funds.
What to do on the first day of retirement?
Some years ago, a friend who had just retired called me on his first day out of work. He didn’t have a clue as to what to do. What made it seem even more urgent was that he called me at 5 o’clock in the morning. He had been a director of a public company and I had always thought that he was extremely well organised. Turns out that he wasn’t. He was completely at a loss.
Managing inflation in retirement
In an earlier article, I showed a method for working out what the after-tax cost of your living standard is before you retire. Comparing this rand value to the after-tax value of the retirement income that you can anticipate from your retirement investments gives you a good guide to what your retirement budget will be and how close it will come to your present living standard.
Thoughts on dealing with ageing in retirement.
There is a general concern that people approaching retirement won’t have enough capital to fund a living standard adequate to their needs. What is often forgotten is that retirement carries a double whammy in that ageing is combined with financial considerations. We are all getting older; and it’s like sitting on a conveyor belt, being carried along. Though the ageing process is relentless, the trick to getting older is to embrace it without fear.
What are the implications of costs for you as investor and pensioner?
People talk a lot about investment costs these days when they refer to unit trusts, endowment policies, retirement annuity funds and retirement funds. Financial services professionals’ talk about costs and often tell you: “Pay peanuts and you get monkeys.” “Look at everything else first” they say, “and worry about costs last.”
What happens to my Retirement Product at retirement age?
There are three options available:
- If you choose to not retire at your chosen retirement age, you can leave your money in your OUTvest Retirement Product (and even continue to contribute to it if you wish).
- If you choose to retire, you can transfer your funds into a post-retirement investment of your choice.
- You can opt to invest in the default post-retirement product chosen by OUTvest’s Retirement Funds board of trustees. Click here to find out more about this product. Alternatively, fill in the form below and one of our friendly advisors will call you back.
This retirement benefit counselling page provides you with options available and is not a replacement for financial advice that can be obtained from our financial advisors.
What to do with your retirement product when you retire
Retirement Annuities and Pension Preservation Funds
You are 55 years old and can now by law retire from your Retirement Annuity or Pension…
- You are 55 years old and can now by law retire from your Retirement Annuity or Pension Preservation Fund.
- You can take up to one third of the value of your RA or Pension Preservation Fund in cash (subject to tax) and have it paid into your bank account.
- You must use a minimum of at least two thirds of the value of your Retirement Product to purchase an annuity that will provide you with an income. You can use more than two thirds.
- The two thirds can be used to purchase either a Living Annuity, Life Annuity or a combination of both.
- These various annuities have different implications, restrictions and rules. Please see the articles above for more detail.
- Your chosen annuity will provide you with either a monthly, quarterly, half yearly or annual income payment. This income will be subject to taxation.
- Money that can be left to your beneficiaries when you pass on will depend on the annuity type chosen.
- It’s a big decision and there is a lot to consider - we suggest getting good financial advice to make an informed decision.
Provident Preservation Funds
If you were 55 years and over on 1 March 2021, you will still be allowed to commute…
- If you were 55 years and over on 1 March 2021, you will still be allowed to commute your full retirement benefit as a cash lump sum.
- If you were younger than 55 on 1 March 2021, your retirement benefit which accumulated up until 1 March 2021 plus interest accrued up until retirement, may be fully commuted as a cash lump sum. This is referred to as the ‘vesting portion’.
- Benefits accumulated after 1 March 2021 plus accrued interest is subject to a maximum one-third cash withdrawal and the remaining two-thirds must be used to purchase a pension. This is referred to as the ‘non-vesting portion’.
- If the non-vesting portion is less than R247 500 at retirement, you are allowed to commute the full amount as a cash lump sum.
- You must use a minimum of at least two thirds of the value of your Retirement Product to purchase an annuity that will provide you with an income. You can use more than two thirds.
- The two thirds can be used to purchase either a Living Annuity, Life Annuity or a combination of both.
- These various annuities have different implications, restrictions and rules. Please see the articles above for more detail.
- Your chosen annuity will provide you with either a monthly, quarterly, half yearly or annual income payment. This income will be subject to taxation.
- Money that can be left to your beneficiaries when you pass on will depend on the annuity type chosen.
- It’s a big decision and there is a lot to consider - we suggest getting good financial advice to make an informed decision.
More articles relating to retirement and retirement investing