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Merging two retirement annuities

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(Shutterstock)
A Fin24 user wants to know if he could merge his retirement annuities in order to save costs. He writes:

I have two separate retirement annuities, both with Allan Gray.

They are both invested in the same unit trusts. Can they be merged to save admin and probably overall costs?

Richard Carter, head of product development at Allan Gray responds:

Although retirement annuities can be combined in certain instances, combining them won’t reduce your annual administration fee.

This is because your administration fee is based on the combined value of all your accounts on our local investment platform, and not your individual accounts.

If you have other investments on our local investment platform, such as a preservation fund or an endowment policy, these will also be included when calculating your administration fee.

The administration fee works on a tiered structure - we charge 0.50% for the first R1.5m and 0.20% for any balance over R1.5m.

These amounts are then reduced by any manager fee discounts, which are amounts paid to us by the managers of the funds that you are invested in, and passed back to you.

For any investment into Allan Gray funds, the administration fee that we charge is completely offset by the manager fee discount.

This means that you effectively do not pay any administration fees to invest in Allan Gray unit trusts.

To sum up, while your retirement annuities might be able to be combined, the good news is that you don’t need to do this as we already give you the full credit for the combined assets in working out your annual administration fee.

 - Fin24

Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.

Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.

Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.


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