Question 1

What is a retirement annuity in South Africa?

Accepted Answer

A retirement annuity (RA) is a retirement savings vehicle regulated under the Pension Funds Act. You contribute over time, the money is invested, and it's locked in until at least age 55 — it isn't a bank account you can dip into.

Question 2

Are retirement annuity contributions tax deductible?

Accepted Answer

Yes. SARS allows a tax deduction on RA contributions of up to 27.5% of your taxable income, capped at R350,000 a year. It's one of the main reasons RAs are widely recommended alongside a pension or provident fund.

Question 3

What fees do retirement annuities charge?

Accepted Answer

Typically some mix of an admin fee, the underlying investment fund's management fee, and — if sold through a financial adviser — an advice fee. Providers usually summarise the total as an Effective Annual Cost (EAC), which is the figure worth comparing.

Question 4

What's the difference between a direct and an advised retirement annuity?

Accepted Answer

A direct (execution-only) product lets you open and manage it yourself online, usually for a lower fee. An advised product is sold and managed through a financial adviser for a higher combined fee that includes their ongoing advice.

Question 5

Can I access my retirement annuity before I retire?

Accepted Answer

Only in limited ways. Since the two-pot retirement system took effect, you can make one withdrawal a year from your "savings pot" (a third of new contributions), but your "retirement pot" — the other two-thirds — stays locked in until at least age 55.

Question 6

Can I transfer an existing retirement annuity to a new provider?

Accepted Answer

Often yes, under Section 14 of the Pension Funds Act — but not every provider accepts every transfer, and some set a minimum transfer value. Check the receiving provider's own terms before you start the process.

Question 7

What happens to my retirement annuity when I retire?

Accepted Answer

You can take up to a third of it as a cash lump sum, subject to tax, and the rest must buy a compulsory annuity — a guaranteed or living annuity — that pays you a regular income for the rest of your retirement.

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