Retirement Annuities

The main difference between a retirement annuity (RA) and pension/provident funds is that unlike a pension fund or provident fund, a retirement annuity is independent from your employer. This means that for a RA, you own your investment yourself and membership of the RA fund is not dependent on your employment status. This provides you with greater flexibility and control over your investment.

For a retirement annuity, you make monthly contributions (often by debit order) to Regulation 28 funds, which are retirement funds that fall under the retirement fund regulations. You are able to make your own choice as to which funds to invest in as long as they comply with Regulation 28.

Apart from the above main differences, the rules for accessing your RA are similar to pension and provident funds.

Like with a pension or provident fund, when you retire at age 55 or older, you may withdraw up to one third of your retirement annuity as a cash lump sum (which is taxable at specified rates we consider in the next topic). The remaining balance must then be used to purchase an income annuity which is subject to normal tax.

You may not withdraw funds from your RA before age 55 unless:

  • you emigrate; or
  • you retire due to ill-health.