Investors who haven’t retired yet can grow their savings and earn interest through the Allan Gray retirement annuity. This platform offers a range of unit trusts for investment, managed by Allan Gray. There are four unit trusts to choose from.
One of the perks of the Allan Gray retirement annuity is its tax benefits. Contributions to the account can be partially deducted from taxes since the aim of SARS is to promote retirement savings. Furthermore, both the capital and interest gained from this investment are tax-free.
Access to the funds in the Allan Gray retirement annuity is typically restricted until retirement age, though exceptions exist for cases like disability or terminal illness.
Getting started with the Allan Gray retirement annuity is straightforward. You can invest online through their website or request assistance via a callback. As the investor, you’ll oversee the management of your retirement annuity, so it’s crucial to understand the investment options available.
Before opening an Allan Gray retirement annuity, prioritize understanding its benefits and operations, as detailed below.
Allan Gray’s retirement annuity summary
The Allan Gray retirement annuity offers a savings platform where account holders can earn interest by investing in Allan Gray’s investment options. This product is available to individuals under the age of 55, including minors aged 18 and above.
For individuals aged 18 to 55, monthly contributions start at R1,000.00 and can be adjusted as needed, as long as they meet the minimum requirement. A lump sum payment requires a minimum contribution of R50,000.00.
Minors, or those under 18, can also open an account with monthly contributions starting at R500.00. The minimum lump sum contribution for minors is R20,000.00. Combining lump sum and monthly contributions is also possible.
Investments in the Allan Gray retirement annuity can be allocated to one or more of Allan Gray’s unit trusts, which include the following options:
- Allan Gray Equity Fund,
- Allan Gray Balanced Fund,
- Allan Gray Stable Fund, or
- Allan Gray Money Market Fund
Contributions to the underlying investments can be made according to the preferences of the investor. The investor has the option of increasing or decreasing his or her stake in one or more unit trusts.
At the age of 55, you can access your Allan Gray retirement annuity savings. At this time, investors can withdraw some or all of their funds. However, if you have a disability or a serious illness, you can withdraw money from the account.
How the Allan Gray retirement annuity work
Individuals under the age of 55 are eligible to apply for an Allan Gray retirement annuity. However, those under 18 must have a guardian or adult represent them. The application requires naming beneficiaries, who can be anyone from direct or extended family to friends.
Upon application, the applicant must allocate funds, which can be divided per unit trust and contributed as a lump sum or monthly payments. Access to the invested funds is typically available at age 55, with exceptions for specific withdrawals.
After submitting the application to Allan Gray, an Allan Gray consultant will contact the applicant to finalize the process and agree on the account’s activation date. The deposited funds are then allocated within the Allan Gray retirement annuity.
The investment growth depends on the performance of the unit trust(s). Positive performance leads to increased investment, while market downturns can decrease the invested amount.
Allan Gray’s unit trusts have historically outperformed the market, though losses can occur in the short term. Only investors aged 55 and above can access the invested funds and accrued interest.
Advantages of the Allan Gray retirement annuity
- The minimum monthly contribution is affordable.
- Anyone below the age of 55 can apply for the account, even those below the age of 18.
- There are many underlying investments to choose from, and one’s choice will depend on his/her risk appetite.
- There are no taxes on the proceeds made from investing.
- Restrictions as per regulation 28 of the pension funds act to protect the retirement annuity.
- There are immediate tax benefits on contributions to the Allan Gray retirement annuity.
- Since only one-third of the retirement annuity can be withdrawn at the retirement age, two-thirds can be reinvested to earn retirement income.
Disadvantages of the Allan Gray retirement annuity
- There is a possibility of making short-term losses and the principal investment may be at risk.
- Those that are not familiar with the Allan Gray unit trust may end up investing in a unit trust that doesn’t suit their investment needs.
Conclusion
The Allan Gray retirement annuity has a high chance of providing long-term retirements to investors. This is because the unit trusts from Allan Gray that the savings are invested in have proven to show positive results in the long run. Make sure you understand the Allan Gray unit trusts fully to make informed decisions about your retirement.
