Retirement Annuity

What is a retirement annuity?

A retirement annuity (RA) is an investment product specially designed for individuals to save or retirement responsibly and tax efficiently. These products are government legislated and have specific attributes:

  • RA funds are protected from most creditors
  • You pay no initial fees or exit penalties or admin fees
  • Tax efficient: tax deductible contributions, tax free investment growth

Who can access my funds?

Before retirement
No access, unless allowed in terms of Income Tax Act

At retirement (from age 55)

  • You can only access your RA investment at the age of 55, making disciplined retirement savings easier
  • At retirement, you must use at least two thirds of your RA to invest in an annuity that will pay you a regular income. This income will be taxable then.
  • You can take one third in a cash lump sum, of which a portion will be tax-free and the rest taxable then.

Tax benefits

Retirement annuity contributions are limited to 27.5% of the greater of remuneration or taxable income. This is limited to a maximum of R350 000 per annum.

No income, capital gains or dividend withholding tax before retirement within the fund.

The Ecsponent Retirement Annuity Fund is suitable for anyone who is:

  1. self-employed
  2. do not belong to an employer’s retirement fund
  3. have an irregular income stream and wish to change their contribution rates from time to time
  4. formally employed and would like to supplement his/her retirement savings in a tax efficient way
  5. want to make provision for their dependents

Why should I choose the Ecsponent Retirement Annuity Fund?

The Fund provides you with a tax-efficient, low cost, flexible retirement savings product which is easy to understand.

Can I transfer my existing RA to the Ecsponent Retirement Annuity Fund?

You may transfer your existing RA to the Ecsponent Retirement Annuity Fund and there will be no penalties should you wish to transfer your Ecsponent Retirement Annuity Fund benefit to another provider.

Which underlying investment funds can I choose?

You may select from a wide range of unit trust funds. The combination of your fund choices must comply with Regulation 28 of the Pension Funds Act. Regulation 28 currently limits equity exposure to 75% and international exposure to 30% of the value of the investment.

To simplify the investment decision, we highlight some of the funds we believe are cost-effective and ideal to grow and maintain your retirement benefits over the long term. All these funds are Regulation 28-compliant.

  • Ecsponent low equity fund
  • Ecsponent moderate equity fund
  • Ecsponent high equity fund

What is it going to cost me?

You will pay an on-going administration fee which depends on the size of your investment. All fees are quoted as a percentage of assets excluding VAT, under management on an annual basis:

Investments < R5m Investments R5m - R10m Investments > R10m
Administration 0.45% 0.35% 0.23%
Sponsor fee 0.20% 0.20% 0.20%

Refer to the fund fact sheets for underlying investment costs.

Disclosures

 

The Ecsponent Retirement Annuity Fund is registered with the Financial Sector Conduct Authority (“FSCA”), (registration no: 12/8/38158) and approved by the South African Revenue Services (“SARS”). The Fund is established by the Sponsor, Ecsponent Financial Services (Pty) Ltd (registration no: 2006/012668/07). The Funds are administered by an administrator chosen by the Funds’ Trustees from time to time. The current benefit administrator of the Funds is D and D The Cycle (Pty) Ltd (“The Cycle”), (registration no: 2013/157477/07). The Cycle is an approved fund administrator and an authorised Financial Services Provider. The current investment options available to the members of the Funds are approved external funds, Personalised Share Portfolios (PSP) and selected pooled investments.

 

This guide has been compiled to provide factual information on the product offered and does not constitute advice.

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