February is the time to take advantage of the tax breaks which retirement annuities offer

The end of February heralds the end of the tax year for all individuals. Those of our clients who need to reduce taxable income and naturally boost retirement savings will be wise to consider the last opportunity to reduce tax payable for the 2010 tax year.

Retirement Annuities serve many functions, to name a few:

• Top up your existing Retirement Annuity to the full tax-deductible amount.
• Although you might belong to a pension or provident fund you may have earned other income that is non-pensionable. A Retirement Annuity contribution based on 15% of non-pensionable earnings will reduce tax payable.
• If you do not belong to a pension or provident fund you can use a Retirement Annuity to reduce tax payable. Up to 15% of income can be contributed to a Retirement Annuity and will be tax-deductible.
• There is no cut-off date in terms of one’s age. So if you are over 70 and need tax relief a Retirement Annuity is an excellent means to reduce tax as well as ultimate Estate Duty. [The Estate Duty saving will be dealt with in a future Communiqué.]

Silke Financial Services has long advocated avoiding the use of Life Assurance Companies for Retirement Annuities due to their high cost structures. The best method is to use a low cost unit trust-based Retirement Annuity. There is a myriad of funds from which to choose - from low risk to medium to full equity funds - to suit your needs.

Even if you are not in a position to make a lump sum contribution to a Retirement Annuity before the end of February 2010 it is a good idea to start a new one from 1 March to get the two benefits of tax-deductibility and Retirement Saving.

Silke Financial Services has the skill and expertise to advise on all investments according to one’s needs and time horizons.