Tax-free savings products were introduced two years ago while retirement annuities – in some form or another – have been around for decades. How do they measure up in terms of helping you to save for your golden years?
With the end of the tax year on 28 February, now is a good time to remind ourselves again of the numerous advantages of saving for retirement through certain investment products. These investment vehicles have considerable tax advantages over discretionary products, where these benefits do not apply.
Specifically, we’ll be looking at the good old retirement annuity and then also tax-free investments, which were introduced in 2015 as an additional savings vehicle to encourage South Africans to save more.
Retirement annuities (RAs)
RAs have been around for as long as most of us can remember. They are basically private pension plans, specifically designed to help you save for retirement. They have evolved significantly over time into much more flexible and affordable investment vehicles from the more traditional life insurance products of old.
Investors can now make use of so-called “new-generation” RAs on linked investments platforms (LISPs). These are more flexible and far less expensive to administer, contributions can be made as and when the investor chooses (in the form of a lump sum or a regular debit order) without possibly paying any penalties for missing contributions, and there are also a wealth of underlying unit trusts available to choose from.
Benefits of saving through an RA
The first and most significant benefit is the tax deductibility of RA contributions. As from 1 March 2016 all contributions to pension, provident and RA funds are consolidated and are deductible up to 27.5% of the greater of remuneration or taxable income, capped to R350 000 annually.
Denne historien er fra 2 March 2017-utgaven av Finweek English.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra 2 March 2017-utgaven av Finweek English.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent? Logg på
THE HEALTH OF SA'S MEDICAL SCHEMES
As the Covid-19 pandemic abates, finweek takes a look at the financial performance of some of the largest players.
The effect of Gilbertson's departure
With Ntsimbintle Holdings now the major shareholder of Jupiter Mines, it could change SA’s manganese industry.
Making money from music
Why investors are increasingly drawn to the music industry.
Conviction is key
Sandy Rheeder plays a critical role in Mukuru’s mission to open up financial services to the emerging consumer market in Africa through tailor-made technology solutions and platforms.
The post-pandemic toolkit
How CFOs can use technology to support growth.
Big city living exodus
Mini cities like Waterfall City and Steyn City are redefining city-style apartment living.
Big compact, big value
Handsome, with a hefty level of standard specification, the roomy Haval Jolion compact crossover is a great value proposition.
On barriers to entry
There are various ways in which a company or sector can achieve competitive dominance. They usually make for good investments.
Fear and greed in one index
To buck the trend, when markets are hot or cold, is a tough thing to do. However, it can deliver solid returns.
Africa's largest data centre facility coming soon
Vantage Data Centers plans to invest over R15bn for its first African data centre facility in Attacq’s Waterfall City.
