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Retirement Annuity Funds

A retirement annuity fund is often described as the individual's personal and portable pension fund. To a large extent the two funds are very similar, with
the principle difference being the absence of an employer\employee relationship in the case of a pension fund.

A retirement annuity fund is established in terms of the Pensions Fund Act and is subject to the supervision of the Registrar of Pension Funds who in
turn falls under the authority of the Financial Services Board. An individual joins a retirement annuity fund by signing the relevant application form.

Contributions to a retirement annuity fund may usually be made at a rate chosen by the member, although most funds do impose a minimum level of
contribution. The frequency of contributions is usually also flexible and may even consist of a single lump sum. Unlike the rules relating to premium
variations under life policies, no legal controls are applicable to the payment of contributions to a retirement fund, consequently, contributions may be
increased or reduced or even stopped without there being any adverse tax consequence to the member.

A member may retire from a retirement annuity fund at any time between the ages of fifty-five and seventy (both male and female). No benefit may be paid
to a member or his dependants prior thereto, except in the case of death or disability. Retirement annuity benefits may not be ceded or encumbered in
any way, and, consequently, cannot be used as collateral security. (Section 37A)

Contributions received by the fund are invested by the trustees in the equity, property, gilt and money markets, in compliance with the prudent investment
guidelines laid down by the Financial Services Board.

A member may choose whether he wishes to have life and\or disability cover included in the benefits payable. If such options are selected, it will result in
a larger amount being available to fund the benefits to the member or his dependants in the event of his death or disability.

The only benefit payable by a retirement annuity fund to a member or his dependants is an annuity. However, not more than one-third of the total value of
the annuities to which a person becomes entitled to receive from the fund, may be commuted to a lump sum. There is one exception to this rule. Where
the annual amount of such annuity or annuities purchase price does not exceed R1800, the entire benefit may be paid as a lump sum.

Once an annuity is purchased it is still possible to change companies should you be dissatisfied.

The deductibility of contributions to a retirement annuity fund effectively reduces the net cost of contributions to the member, since a portion of each
contribution is funded by the consequent tax saving. The higher the member's marginal rate of tax, the lower the percentage net cost he bears.