If you are contributing to a retirement annuity (RA) in SA, there are some important developments you should take note of. The following is taken from Fin24.com, with my emphasis:
In the first of two discussion documents on reforming the retirement industry published by Treasury on Friday, radical changes to annuity products are proposed in order to remove “structural shortcomings” in retirement annuities.
This could have far-reaching consequences for providers of annuity products as well as financial advisers.
To bring down the cost of life annuities, Treasury proposes that they be replaced by a retirement income trust (RIT), which does not allow for investment choices. RITs will be modelled along the lines of unit trusts and will be more transparent and understandable that life annuities.
Underlying investments will have to comply with investment regulations for pension funds and commission payments to advisers will be strictly limited.
These are the documents from Treasury website.
|Media Statement: Household Savings and Retirement Reform Discussion Papers||(107kb)|
|Enabling a better income in retirement||(1,116kb)|
|Preservation portability and governance||(748kb)|
Government is getting ready to lock in your retirement money for longer, and also to force you to fund government borrowing in the process. Best you stay informed.