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It's never too early to start saving
Saving for retirement is often something that we put off until ‘later’. But investing from the moment you receive your first paycheque, no matter how small the amount, lets your money work for you. With the power of compound interest, you can start earning interest on your interest. As you plan for retirement, your goal should be to save enough money to generate a monthly income that allows you to comfortably cover your living expenses. There are several ways to getting a start on saving, each with their own pros and cons.
Pension and provident funds vs retirement annuities
While all three options qualify for the same tax benefits, there are significant differences between them.
Both pension and provident funds are offered by an employer, often as a condition of employment – with you and your employer making monthly contributions to these funds.
A retirement annuity (RA), on the other hand, is purchased by an individual, meaning you’re free to contribute to one whether you’re self-employed or already contributing towards a pension or provident fund. They also typically offer wider investment fund choices than either of the other two funds.
Why choose retirement annuities
Wealth Bonus
With your Sanlam Retirement Plan, the longer you make contributions and the higher the amount of these contributions over the term, the higher your Wealth Bonus amount will be.
Tax savings
Contributions to a retirement annuity can lower the amount of your taxable income, subject to specific limits. A portion of your contributions comes from tax savings, meaning that the South African Revenue Service (SARS) is effectively contributing to your retirement savings. Another benefit is that the growth of your investment is exempt from taxes.
Protection from creditors
Retirement savings are safe, irrespective of any personal financial loss you may suffer. This ensures that your savings will be available when it is most needed and for what it is intended - the provision of your retirement income.
Start saving for retirement
Sanlam Retirement Plan
Managed on your behalf
Your savings is gradually switched to match your investment needs as you get closer to retirement, at an extremely low cost. Therefore you do not have to study the markets yourself to make investment decisions.
Get a savings boost
Sanlam will boost your retirement savings by adding an additional amount as a Wealth Bonus at retirement or termination. The longer you save, the bigger the bonus.
It's cost-effective
Wealth Bonus makes the Sanlam Retirement Annuity one of the most cost-effective savings options in the market.
Glacier Retirement Annuity
Freedom to change
You have total freedom to change your underlying investments. There is no charge to make a change, but depending on where you move your money to, initial investment charges may apply.
Wide choice of investments
Access local and offshore funds with a variety of risk profiles and management styles.
Flexibility
Stop and start contributions when your circumstances change.
Understanding two-pot retirement
Starting 1 September 2024, retirement savings are split into two components for new contributions: a savings pot which allows limited access before retirement (subject to tax and rules), and a retirement pot, which is preserved to provide an income at retirement. Any savings made before this date follow the previous rules and remain in a vested pot. The combined total of all three components makes up your retirement savings.
Your questions answered
How does Wealth Bonus® work?
Sanlam contributes an additional 10% of your monthly contributions, plus the two-pot administration charge, back into your Wealth Bonus. 50% of the accumulated Wealth Bonus unlocks at age 55 with the full Wealth Bonus unlocking at age 60.
What if I can't save the recommended amount each month?
The earlier you start saving, the better. if you cannot save the recommended amount, save whatever you can afford. You can also add some of your bonus payments to your retirement annuity.
What happens to my savings at retirement?
Your savings provide you with an income in your retirement years. When you retire, you may take up to one third of your accumulated savings in a cash lump sum. The rest is used to provide you with a monthly income.
The retirement benefit may be taken at any time from your 55th birthday, or earlier in the event of ill-health. The early retirement benefit amount is equal to the policy fund value. No transaction or termination charge will apply on transfer or retirement. The Wealth Bonus amount is paid out separately and does not form part of your retirement benefit.
How does Sanlam manage my investment over time?
Your retirement savings are managed on your behalf. The Sanlam Retirement Annuity offers an investment facility where your savings are gradually switched as you get closer to retirement, at an extremely low cost. Therefore you do not have to study the markets yourself to make investment decisions - instead you have complete peace of mind for the duration of your investment.
What if I want to consolidate all my retirement annuities?
You can transfer your other retirement plans to the Sanlam Cumulus Echo Retirement Plan.
By doing so, you will be able to view all your retirement plans in one place. Plus, if you have more than one Cumulus Echo Retirement Plan with a combined value of more than R500 000, portfolio pricing will apply. And that's great news as it means that the combined value of your plans will be considered when it comes to determining the marketing and administration charges, resulting in lower fees.
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Retire with Sanlam
Preparing to retire
Once you reach retirement, it’s time to draw on the savings you’ve been putting away over the years. Turn your retirement savings into an income so you can maintain your lifestyle when you stop working.
Sanlam retirement fund members
Access up-to-date information about your Sanlam retirement fund at your fingertips and manage your employee benefits online, enabling you to grow and protect your savings to live and retire with confidence.