Allan Gray living annuity review 2022

Published by
Lethabo Ntsoane

A living annuity gives financial security during retirement. The Allan Gray living annuity is no exception; it provides retirement income. Withdrawals are tax-free and can be used to cover a member’s expenses in retirement. The Allan Gray living annuity investment that you take out will benefit your beneficiaries as well; that is if you outlive your investment.

The Allan Gray living annuity necessitates careful consideration by the investor. Because the money is invested and there are no capital or interest guarantees, withdrawals must be handled carefully.

If withdrawals are not managed properly, the investor may outlive the investment. There will be no more withdrawals available for the investment. As a result, the investment must be long-term and your contribution to the account must be sufficient to cover your living annuity.

You should consult with an advisor before making a contribution or opening an account. There are other calculations to be made, such as the investment’s future value, and so on. As a result, a financial advisor will be able to assist you.

It is critical to obtain a living annuity, and it is a requirement if you already have a retirement annuity. There are multiple benefits that come with the Allan Gray living annuity that you can take advantage of.

You can educate yourself by learning about the Allan Gray living annuity and how it works in the following sections.

Allan Gray living annuity summary

Allan Gray living annuity is for people who want income in retirement. Those under the age of 18 are not eligible for the Allan Gray living annuity. To begin with the living annuity, a lump sum contribution of at least R125,000.00 must be made into the account. It is not possible to contribute to a living annuity on a monthly basis.

Money contributed to an Allan Gray living annuity can be used to invest in one of the company’s unit trusts. Allan Gray Stable Fund, Allan Gray Equity Fund, Allan Gray Money Market Fund, and Allan Gray Balanced Fund are among the unit trusts offered by Allan Gray. An investment can be made in one or more of the various unit trusts.

The Allan Gray living annuity has various withdrawal restrictions that must be followed. A minimum yearly withdrawal restriction of 2.5 % of the investment portfolio is one of them. The maximum annual withdrawal is set at 17.50 % of the investment’s value. This limit exists to ensure that investors’ funds do not run out too quickly.

Regulation 28 of the Pension Funds Act applies to the Allan Gray living annuity. 75 % or less of the money can be invested in shares, 25 % or less in property, and 45% or less of the funds can be invested in foreign assets. With these parameters, it may be required to invest in more than one unit trust.

How the Allan Gray living annuity works

To begin investing in an Allan Gray living annuity, you must make a lump sum payment to the account. However, a request for an account must be made. You can apply for an account on the Allan Gray website

. It only takes a few minutes to complete the application, and it may be done totally online.

Following the submission of an application, the applicant will be contacted to complete the process. The account will then be opened, and a minimum contribution of R125,000.00 will be required. This contribution must be made in one lump sum since piecemeal contributions will not be accepted.

The cash deposited to the account will subsequently be distributed to the unit trust that the applicant has chosen. Contributions to unit trusts will be apportioned according to the applicant’s desire. It is possible to transfer funds from one unit trust to another without paying any fees.

The funds in the living annuity account are immediately available. Withdrawals, on the other hand, can be done monthly, quarterly, biannually, or annually. The maximum annual withdrawal from the account is 17.50 % of the investment’s value.

Beneficiaries will have to be listed on the Allan Gray living annuity. Beneficiaries will be those that get to benefit from the investment should the account holder outlive his/her savings. The money in the account will be shared amongst the named beneficiaries. 

Advantages of the Allan Gray living annuity

  • Income can be taken out on a monthly, quarterly, biannually, or annual basis.
  • There are various investment vehicles from which to pick.
  • To hedge portfolio risk, investment vehicles invest in both domestic and overseas markets.
  • Regulation 28 gives investors a sense of security when it comes to their money.
  • The product can be purchased in its entirety online.
  • Beneficiaries can be named to receive any money remaining in the account when the owner passes away.
  • There are no taxes, for the amount of money withdrawn,.
  • The account’s annual withdrawal limit allows it to generate more interest over time and to last longer.

Disadvantages of the Allan Gray living annuity

  • Money put into the account may be lost or decreased at any moment.
  • Excessive withdrawals might deplete an investment.

Requirements of the Allan Gray living annuity

  • Must have a contribution of R125,000.00 or more.
  • Transfer retirement savings into the account.
  • Be over 18 years of age at the time of application.
  • Provide proof of residence that is not older than 3 months.

Conclusion

Those who contribute to the Allan Gray living annuity will get a consistent income. If you invest and withdraw money in a calculated manner, your money can last a lifetime. To keep a living annuity going, one must aim for long-term capital growth and keep withdrawals to a minimum.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted at lethabo@rateweb.co.za

Published by
Lethabo Ntsoane
Tags: Allan Gray
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