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A Fin24 user is about to retire and wants to know how he should invest his retirement payout. He writes:
I am nearing retirement (within the next few months) and I have a few questions regarding the process and where to invest.
My current company pension fund is R3.5m. My research leads me to think that a living annuity would best suit me.
Please could you advise which underlying unit trusts you would recommend I invest in, and how much capital I should allocate each unit trust?
Gustav Potgieter CFP® of Aurum Trust responds:
I believe that you have done your homework regarding your different options on retirement, but just to recap: on retirement you normally have two options.
You can either leave the money in the company’s pension fund, or buy your own pension via a living annuity or compulsory annuity.
The living annuity is in effect your own investment, governed by law, regarding withdrawal rates and what happens in case of death.
The withdrawal rate can be between 2.5% and 17.5% per year and could be adjusted annually on its anniversary.
Upon death the investment goes to your beneficiary, and upon his or her death to his or her beneficiaries.
The main differences between a company pension and a living annuity are as follows:
- The pension normally decreases upon the death of the pensioner;
- The pension stops after the death of the surviving spouse;
- In a living annuity you are in charge of your investment, subject to the law governing living annuities.
The platform where you would want to place your money is mainly determined by the costs and fund choices.
Some platforms even allow you to have a personal share portfolio as the main asset in your living annuity.
The personal share portfolio can be managed by a number of professional fund managers.
After you have decided which platform would suit you best, you should consult with an experienced professional adviser (certified financial planner).
The adviser will do a risk analysis, discuss all the investment options and advise you accordingly.
Unfortunately I cannot list funds, because I have not seen you or know anything about you.
I strongly advise that you contact a properly qualified adviser to discuss your options, because you have worked a long time to build up your pension and a wrong decision could cost you dearly.
- 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.
I am nearing retirement (within the next few months) and I have a few questions regarding the process and where to invest.
My current company pension fund is R3.5m. My research leads me to think that a living annuity would best suit me.
Please could you advise which underlying unit trusts you would recommend I invest in, and how much capital I should allocate each unit trust?
Gustav Potgieter CFP® of Aurum Trust responds:
I believe that you have done your homework regarding your different options on retirement, but just to recap: on retirement you normally have two options.
You can either leave the money in the company’s pension fund, or buy your own pension via a living annuity or compulsory annuity.
The living annuity is in effect your own investment, governed by law, regarding withdrawal rates and what happens in case of death.
The withdrawal rate can be between 2.5% and 17.5% per year and could be adjusted annually on its anniversary.
Upon death the investment goes to your beneficiary, and upon his or her death to his or her beneficiaries.
The main differences between a company pension and a living annuity are as follows:
- The pension normally decreases upon the death of the pensioner;
- The pension stops after the death of the surviving spouse;
- In a living annuity you are in charge of your investment, subject to the law governing living annuities.
The platform where you would want to place your money is mainly determined by the costs and fund choices.
Some platforms even allow you to have a personal share portfolio as the main asset in your living annuity.
The personal share portfolio can be managed by a number of professional fund managers.
After you have decided which platform would suit you best, you should consult with an experienced professional adviser (certified financial planner).
The adviser will do a risk analysis, discuss all the investment options and advise you accordingly.
Unfortunately I cannot list funds, because I have not seen you or know anything about you.
I strongly advise that you contact a properly qualified adviser to discuss your options, because you have worked a long time to build up your pension and a wrong decision could cost you dearly.
- 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.
