When you retire, the Coronation Living Annuity pays you a regular income from your retirement money (including retirement annuity, pension, provident or preservation funds). While there is no tax on any investment gains achieved in the living annuity, any income taken is taxed using the standard tax tables.
The Coronation range of unit trust funds can be used to build an appropriate investment portfolio. The Coronation Capital Plus Fund, which has a moderate risk profile, and the Coronation Balanced Defensive Fund, which has a reduced risk profile, are ideal for retired investors who need to combine their immediate income demands with the need for long-term growth.
Investors in living annuities are currently not subject to Regulation 28 of the Pension Funds Act, which means that there are no required investment constraints, as there are with Retirement Annuity investments. Current law demands a minimum yearly income withdrawal of 2.5% and a maximum withdrawal of 17.5% of the Living Annuity’s value.
The Coronation Living Annuity is adaptable, affordable, and transparent. It is intended to give you the freedom to adjust your post-retirement income level annually and/or move between investment options as your circumstances change. We do not impose any upfront or annual administrative costs. The only costs that must be paid are the annual management fees for the underlying unit trust funds chosen by the investor.
In South Africa, how does a life annuity work?
A guaranteed annuity is simply an insurance product purchased from a life insurance company. In exchange for your retirement savings, the insurer guarantees you a fixed monthly income for the rest of your life.
What’s the distinction between a retirement annuity and a living annuity?
Unlike a pension fund or guaranteed annuity, where your pension is guaranteed for as long as you live, regardless of market conditions, you cannot afford to spend all of your capital too quickly in a Living Annuity unless you have other sources of income.
Is it possible to cash in a living annuity?
You may not withdraw from your Living Annuity policy unless the policy value is less than the legally mandated minimum (currently R125 000), in which case you may seek a full lump sum withdrawal. Withdrawals will be taxed at the rates specified in the retirement fund lump sum tax tables.
Who can get a living annuity?
To invest in our Living Annuity, you must have at least R60 000. You can withdraw an annual income of 2.5% to 17.5% of your total investment value. You must manage your investment in order for it to last into your retirement.
In South Africa, how are living annuities taxed?
The tax on living annuities is a pay-as-you-earn (PAYE) tax withheld by an annuity provider at the tax rate set by the personal income tax table, taking into account annual tax refunds.
What happens to a living annuity after the owner dies?
A living annuity’s death benefit is given to chosen beneficiaries and can be accepted as a lump sum payment, transferred to another living annuity / guaranteed life annuity, or a combination of the two.
