Demystifying Retirement Annuities, Preservation Provident Funds, and Preservation Pension Funds

Ah, the golden years of retirement! A time when you can trade in your 9-to-5 routine for leisurely strolls, hobbies you've always wanted to pursue, and maybe a bit of globetrotting. But wait, how do you ensure those years are truly golden? That's where Retirement Annuities, Preservation Provident Funds, and Preservation Pension Funds come into play. Let's dive into the world of these financial tools and figure out what makes each one tick.

Retirement Annuities
Retirement Annuities (RAs) are a type of retirement savings plan that offers you tax benefits and flexibility. Your contributions to an RA are tax-deductible, which means you can reduce your taxable income. The growth on your investments within the RA is also tax-free.

You can open a retirement annuity as an individual, even if you are not employed or you want to save for retirement independently from your employer.

• You can contribute up to 27.5% of your taxable income to a retirement annuity.
• The growth and income in your retirement annuity is tax-free while you are still saving.
• When you retire, you must use at least two-thirds of your RA to purchase an annuity income for retirement. The remaining one-third can be taken as a lump sum.
• The full benefit may be taken as a cash sum if equal to or not more than R 247,500
  

Preservation Provident Fund
A Preservation Provident Fund is a type of retirement savings plan that is designed to preserve your provident fund savings when you change jobs. When you transfer your provident fund to a Preservation Provident Fund, you can’t continue to make contributions and your savings will continue to grow tax-free.

Preservation Provident Fund can be a good option for people who want to keep their provident fund savings separate from their new employer's provident fund.

Preservation Pension Fund
A Preservation Pension Fund is a type of retirement savings plan that is designed to preserve your pension fund savings when you change jobs. When you transfer your pension fund to a Preservation Pension Fund, you cannot make contributions and your funds will be preserved until you retire.

Preservation Pension Funds can be a good option for people who want to keep their pension fund savings separate from their new employer's pension fund.


EasyEquities Retirements
The best retirement savings vehicle for you will depend on your individual circumstances. If you are self-employed or do not have an employer-sponsored retirement plan, then a retirement annuity may be a good option for you. Retirement annuities offer more flexibility in terms of how you contribute and how you access your funds in retirement and the EasyEquities RA allows you to invest in a variety of underlying unit trusts. This gives you the flexibility to choose the investments that are right for your risk appetite and investment goals.

The EasyEquities Retirement also offers a number of tax benefits, including:

• Tax-deductible contributions
  
• Tax-free growth on investments
  
• One lump sum withdrawal before retirement without tax implications
  
  

Account Requirements
To open an EasyEquities Retirement account, you will need to:

• Be a South African resident.
  
• Be over the age of 18.
  
• Have a valid South African ID number.
  
• Have a valid Tax Number.
  
• Select a beneficiary for your account.