REVISING YOUR RETIREMENT ANNUITY

Retirement annuities form a staple for many people’s financial saving diet. Seeing that it is such an important investment it would be wise to not let it stagnate and lose. The fees charged on RA’s have undergone significant change over the past years, if you have been investing into your RA for more than five years, and have not yet reviewed it, then now would be a good time to re-assess your RA portfolio.

Here are some of the general facets of an older retirement annuity issued by any notable insurance company:

  • The contributions received are only invested at the beginning of the subsequent calendar month.
  • There is a policy fee of R5,00 per month charged in addition to the 2.1% fee deducted before any funds are placed in your investment account.
  • During the first year of the contract an additional fee of 25% of the premium amount is charged.
  • Should your contract have an annual escalation of the premium, a fee of 25% of the increase in premium will be charged in the year following the premium increase.

Once these charges have been levied, the net premium will be allocated to your investment account and the investment account will incur the following charges:

  • A portfolio management fee of 1% per annum will be charged against the investment account.
  • A fee of 10% of the profits will be charged leaving 90% of the profits to be allocated to the investment account. Basically, if a profit of 15% was made the account would only be credited with 13.5%.

This is just a quick overview to let you know of some of the key changes, but it is by no means the end of it either, there are still other aspects to be looked at. When you are dealing with this sort of significant growth investment it is best to stay as well-informed as possible. If you feel that you need a revision of your retirement annuity then let’s get in touch!

Posted in Blog, investments.