What to do with SA retirement bennefits/policies?

[hanneskn]

Hi,

can anyone out there give a bit of advice on what the best option is regarding South African policies?

Is it better; and can one, keep your policies in SA once you're in OZ and let them mature, OR

let them pay out and start all over in OZ??

tx.

[Springbok]

Hi,

can anyone out there give a bit of advice on what the best option is regarding South African policies?

Is it better; and can one, keep your policies in SA once you're in OZ and let them mature, OR

let them pay out and start all over in OZ??

tx.

Hannes,

Best to make them paid up, there's not really any use to keep them going. The life company will probably hit you with an early termination penalty, as Liberty has done in my case, but I have lodged an appeal with the Pension Funds Adjudicator and after a year, he ruled in MY favour. Liberty had to pay back everything PLUS interest. I'm happy to email the ruling to you if you're interested.

According to the Statement of Intent (Dec. 2005) by the longterm insurance industry and the Ministry of Finance, certain minimum standards will be applied to all business where savings is the primary objective (like Retirement Annuities, endowments, whole life business and reversionary bonus business). Policies providing risk cover, are excluded.

It was proposed that upon early premium cessation, each retirement annuity fund member policy shall be credited with the value of at least 70% (seventy) of the investment account of the policy at the date immediately preceding the premium cessation. Then you can either leave the rest of your funds to become available at age 55, or withdraw it now and pay tax on it.

So if you have a retirement annuity policy and plan to emigrate, stop contributing and rather continue to save by putting the money in unit trusts, like those of Allan Gray. Then you can at least withdraw the funds whenever you want, without facing any penalties. Just don't spend the funds you are putting away for retirement, now, unless you have no other way.

But I'm not the expert on this terrain, you should also speak to our resident financial planning guru, Andro, on this forum.

Cheers

Charl

[G72]

Hannes,

Best to make them paid up, there's not really any use to keep them going. The life company will probably hit you with an early termination penalty, as Liberty has done in my case, but I have lodged an appeal with the Pension Funds Adjudicator and after a year, he ruled in MY favour. Liberty had to pay back everything PLUS interest. I'm happy to email the ruling to you if you're interested.

According to the Statement of Intent (Dec. 2005) by the longterm insurance industry and the Ministry of Finance, certain minimum standards will be applied to all business where savings is the primary objective (like Retirement Annuities, endowments, whole life business and reversionary bonus business). Policies providing risk cover, are excluded.

It was proposed that upon early premium cessation, each retirement annuity fund member policy shall be credited with the value of at least 70% (seventy) of the investment account of the policy at the date immediately preceding the premium cessation. Then you can either leave the rest of your funds to become available at age 55, or withdraw it now and pay tax on it.

So if you have a retirement annuity policy and plan to emigrate, stop contributing and rather continue to save by putting the money in unit trusts, like those of Allan Gray. Then you can at least withdraw the funds whenever you want, without facing any penalties. Just don't spend the funds you are putting away for retirement, now, unless you have no other way.

But I'm not the expert on this terrain, you should also speak to our resident financial planning guru, Andro, on this forum.

Cheers

Charl

Hi Charl

I am facing this situation at the moment - leaving in December. Is it possible to "cash-in" my RA's - nobody seems to be able to give me a straight answer so far?

Thanks

G72

[Springbok]

Hi Charl

I am facing this situation at the moment - leaving in December. Is it possible to "cash-in" my RA's - nobody seems to be able to give me a straight answer so far?

Thanks

G72

Hi G72,

Go to Allan Gray's retirement products page...

RA's - The capital in a retirement annuity cannot be withdrawn prior to retirement. But I think you can transfer it (without tax being deducted) to a Preservation Fund. The preservation provident fund allows for a single withdrawal of any portion of the capital in the fund prior to retirement, but remember you will then be taxed at your marginal tax rate.

But once again - check with Andro, as this is not my field of expertise.

Charl

[G72]

Hi G72,

Go to Allan Gray's retirement products page...

RA's - The capital in a retirement annuity cannot be withdrawn prior to retirement. But I think you can transfer it (without tax being deducted) to a Preservation Fund. The preservation provident fund allows for a single withdrawal of any portion of the capital in the fund prior to retirement, but remember you will then be taxed at your marginal tax rate.

But once again - check with Andro, as this is not my field of expertise.

Charl

Thanks Charl

[Bob]

I've just retired from the workforce here in Australia at the tender age of 55.

There are Superannuation schemes for everyone working in this country that help to provide a nest egg in old age, as well as a government Old Age Pension to fall back on if one has nothing else.

If I were in my 20's or 30's, with many years of working life still ahead of me, and thinking of migrating to Australia where there are superannuation schemes for everyone, I'd be wondering what value would my policies have in South Africa in 20 or 30 years' time.

Comparing Zimbabwe, a policy offering Z$30,000 a year in 1976 would have seemed a princely sum to live off then but would only buy you a loaf of bread (Z$30,000) a day in 2006.

How much lifestyle will the ZAR offer in 20 to 30 years? . . . or is it better to pull the plug on the South African policy today and rescue what little it offers in 2006, putting that into an Australian Superannuation policy with more security and promise in the coming years.

You might get to live off the Australian policy instead of perhaps buying only a loaf of bread each day with the South African policy valued in ZARs in 20 to 30 years' time.

. . . . . . . just a thought!

[Springbok]

How much lifestyle will the ZAR offer in 20 to 30 years? . . . or is it better to pull the plug on the South African policy today and rescue what little it offers in 2006, putting that into an Australian Superannuation policy with more security and promise in the coming years.

Hi Bob

So you're saying make the S.A. policy paid up, get it paid out (after deducting tax) and transfer the proceeds into an Aussie Super?

Is a South African Retirement Annuity (RA) the equivalent of the Aussie Superannuation policy?

How about mutual funds? Who would be the Allan Gray of Australia?

Thanks

Charl

[Steve]

Only the funds from a Provident fund and Pension fund can be transferred to a preservation fund, and from there elsewhere. A retirement Annuity locks you into the Capital portion until retirement age.

[Bob]

Personally, I'd be very wary of leaving funds behind in South Africa for a long number of years, for reasons I've just mentioned beforehand.

Whatever avenue you can use to get your funds transferred, I'd be looking seriously at that course . . . . or kiss the value of your funds good-bye.

Once you are in Australia and looking at where to put your savings, I'd be happy to point you in the right direction to making an "informed" decision.