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The real costs of Retirement Annuities (RAs)


Tiermelk

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Anyone mind sharing their costs around getting RA`s out of of SA?

I have a +-R125k RA with Sanlam.

Sanlam`s fees to end the RA due to emigration = R38000 and another 18% tax to SARS which comes to R74000 that I will get out.

That is a 40% loss!

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R125 000 is about $13 000 in Australia.

R74 000 is about $8 000.

I don't think you're talking about a life's savings, just an annuity that you've managed to save over the years in the workforce.

What you have to weigh up is how much the Rand will go down in relation to the Australian dollar over the next few years.

If the Rand depreciates 40% in the next 6 or 7 years, then your losses will have been recuperated largely.

If you choose to leave your RA in South Africa, then it well be locked in and not able to get it out at a later stage.

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I think we lost about 47% in penalties with PPS. But we just went ahead and did it. Once again as Bob said, with the Rand depreciating we just couldn't see our money wasting away for years to come, while struggling here. And then with the government there is also no guarantees that you will keep your private RA. They could turn around at any time and just "nationalise" pension funds to go into one big pool so that we can (as good old Julius keeps reminding us) "learn how to share".....

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Just make sure that ALL costs are included. You'll need a special tax clearance certificate and a blocked Rand account. Is your tax returns up to date? You might be audited by SARS and you'll also need to do a final tax return after you've received your money. Cashkows will quote you upfront and it includes everything (courier, pre-populates your forms, etc) and you only pay the fee at the end once you can bring your money out. It is worth getting a quote. They are registered with the FSB to give advice... They specialise in migrants and know what to do. Good luck!

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Thanks for the advise.

Anyway please take note anyone ever thinking of taking out an RA. :)

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Just for information purposes: where an insurer levies a penalty for early surrender there are rules which prohibit them from charging more than 30% of the value. Typically the penalty will reduce as the policy moves closer to the maturity date. It is important to note that when you are considering what action to take the policy "indicative value" is just that - it indicates the value on the basis that you are holding the policy until maturity, so comparing indicative and surrender values is not strictly correct.

Be aware also that there are proposed changes to pension legislation here in South Africa which, if introduced next year as anticipated, may impact you significantly if you have not either surrendered your pension, RA etc. or exercised the retirement option, beforehand.

I'm happy to assist as required.

Steve Porter

steve@cashkows.com

cashkows.com

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Thanks Steve, I will be in contact.

Do you have any links on hand explaining the proposed changes to the pension legislation?

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