A Retirement Annuity (RA) is a type of personal pension plan that allows individuals to build their retirement savings in a tax-efficient way. With an RA, your contributions are made from your after-tax income, but a key benefit is the significant tax advantages that come with it. These include deductions on your taxable income, as well as tax-free growth of your investments while they're inside the RA. This means that the returns generated from your RA investments—whether they come from interest, dividends, or capital growth—aren't subject to tax until you start withdrawing.
RA investments are also governed by Regulation 28 of the Pension Funds Act, which limits the exposure to certain asset classes. This was legislated to ensure that your retirement savings are diversified and protected from high-risk investments. The regulation caps the percentage of your RA that can be invested in assets like equities (a maximum of 75%) and offshore investments (up to 45%), providing a safeguard against excessive risk while encouraging a balanced portfolio for long-term growth.
In summary, an RA is an excellent vehicle for those looking to save for retirement while enjoying tax benefits and protection from riskier investment choices.
No, there are no minimum contribution limits for the EasyEquities RA. This means you can invest as little or as much as you want, at a frequency that suits you—whether it's weekly monthly, quarterly, or annually. This flexibility makes the EasyEquities RA accessible to a wide range of investors, regardless of the size of their contributions.
Yes, individuals over the retirement age of 55 can still invest in a Retirement Annuity (RA) in South Africa. While RAs are primarily designed to help people save for retirement, there are no age restrictions on making contributions. This flexibility allows older investors to continue benefiting from the tax advantages and estate planning features of an RA, even if they have already reached or passed the typical retirement age.