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17 February 2014
We would like to remind you that the cut-off time for contributions to the Silke Retirement Annuity Balanced Fund for the 2013/2014 tax year is on Monday 24 February 2014. If you would like to contribute to your retirement annuities (RAs) before the end of this tax year, please ensure that we receive your instructions, supporting documents and payments before the deadline.
If you have any questions or feedback, please contact Trevor or Linda on 021 683 3380 or email us at engage@silke.co.za
Retirement Annuity Fund FAQ:
- New RAs and additions need to be Regulation 28 compliant.
Please note that new Retirement Annuities or changes to existing Retirement Annuities must comply with Regulation 28 of the Pension Funds Act. These investment requirements limit the exposure investors can have to certain asset classes (i.e. 75% in equities and 25% in international assets). - What are the risks?
The value of the investment account is directly linked to the market value of the underlying investments and is not guaranteed (i.e. may move up and down). Past performance of the underlying investments is not necessarily a guide to the future. You carry the risk of losses. - What is an investment account?
The unit trusts funds you select as 'underlying investments' make up your investment account. The value of the investment account is directly linked to the market value of the underlying investments and is not guaranteed (i.e. may move up and down). Past performance of the underlying investments is not necessarily a guide to the future. - What is retirement age?
You cannot retire from the Fund before the age of 55 years unless you are permanently disabled. You must submit a retirement notification form when you want to retire from the Fund. - What portion of your total contributions is tax deductible?
You are allowed the greater of the following three tax deductions: Minimum tax deduction: R1 750R3 500 less any contributions made to a pension fund15% of your non-retirement funding income less allowable deductions - What are the other tax implications?
You do not pay tax on any interest or dividends received by the Retirement Annuity Fund. Any capital gain realised is excluded from capital gains tax.At retirement, you will not have to pay tax on the portion of the Retirement Annuity Fund that is transferred to a pension providing vehicle such as a living annuity. Income from an annuity is taxed at the annuitants marginal tax rate.The cash portion at retirement is taxed. - What happens when you die?
Your death benefit is the value of all your investment accounts. This amount is not determined by the date of death or the date of notification, but is determined once the units of the underlying investments in the investment accounts are sold and applicable fees and charges have been deducted. - Who receives your death benefit?
After a full investigation the Trustees will use their discretion to decide who receives a benefit. Your beneficiary(ies) will not automatically receive the death benefits, as dependants receive preference under current legislation. If no dependants are traced within 12 months of your death, and there are no beneficiary(ies), a lump sum may be paid to your estate, subject to the requirements of the relevant legislation. The Trustees determine: who receives the benefit the proportion of the benefit paid to each person - The people who have been allocated a benefit have the following options, which are subject to the requirements of the regulatory authority and/or relevant legislation: Purchase a compulsory annuity Take a cash lump sum Take a combination of cash and a compulsory annuity
- Can the Retirement Annuity Fund be used to secure a loan?
No, you cannot cede your benefits. - Attractive estate planning tool: Individuals can contribute to an RA at any age and can choose to let their RA mature any time from age 55. As RAs no longer have a maximum age limit investors need not "retire" from an RA, making it effective as an estate planning tool. On the death of an RA investor, lump sums received by beneficiaries are exempt from estate duty. Beneficiaries can also take advantage of tax free amounts in the event that a member had not done so during their lifetime. Annuity benefits are also free from estate duty.
Extreme caution needs to be taken if clients wish to top up an existing RA as they need to ensure that their unit trust selection complies with these limits. Alternatively, if your existing retirement annuity is fully exposed to equity funds it could be advisable to keep it intact and start a new Retirement Annuity which complies with Regulation 28.
Silke Financial Services has the skill and expertise to guide to in this regard. |
