Coronation living annuity review 2022

Published by
Lethabo Ntsoane

A living annuity from Coronation ensures income at retirement which members can outlive if investment in the plan is closely managed. The Coronation living annuity pays income at retirement according to the investor’s specifications. Withdrawals on the plan can be done either monthly, quarterly, biannually, or yearly.

Withdrawals come with some restrictions that are there to help investors not to run out of cash in an instant. It is wise to speak to a financial advisor when getting the Coronation living annuity. This allows you to calculate the amount to be invested to earn your desired income.

The Coronation living annuity comes with tax benefits that can be enjoyed during the lifetime of the annuity. Tax is not charged on the earnings that the investment plan makes. This fact makes the product attractive and can be used as a tool to earn more on interest earned. 

The Coronation living annuity cannot be used as collateral for loans and other lendings. Only the account holder and the beneficiaries can get access to the money invested. Beneficiaries will get access to the investment should the investor outlive his/her Coronation living annuity. 

A Coronation living annuity is a living annuity that invests in unit trusts that are capable of growing one’s investment. Before you open the plan with Coronation, take a moment to further understand the product by reading below on what the Coronation living annuity is and how it works. 

Coronation Living Annuity Summary

The Coronation living annuity is an investment vehicle that provides regular income at retirement. The investment vehicle requires a minimum contribution to the plan of R100,000.00. Only a lump sum payment can be made to the account. 

Investments into the plan can come from a retirement fund that can include a retirement annuity, a provident fund, or a preservation fund. The Contribution to the living annuity should be done at retirement or post-retirement. This means that injection into the account starts from the retirement age of 55. 

Coronation living annuity isn’t subject to regulation 28 of the Pension Funds Act 24 of 1956. The regulation states that funds should be managed by imposing restrictions on property investments and offshore investments. Therefore, the investment in the Coronation living annuity won’t have any restrictions imposed on it.

The Coronation living annuity invests in one of the Coronation unit trusts. Unit trusts available include:

An investment can be made in one or more of the unit trusts available. Furthermore, capital can be moved from one fund to another without incurring costs. The product doesn’t have any administration fees or initiation fees involved. 

Withdrawal from the Coronation living annuity comes with certain limits to ensure that the annuity stays invested for a longer period. A minimum withdrawal from the investment is 2.50% and the maximum withdrawal from the investment is 17.50%.

How the Coronation living annuity works

The Coronation living annuity is for those that want to earn a regular income at retirement. The product requires a lump-sum contribution which starts at R100,000.00. Contribution to the living annuity can come from a retirement product, for example, a retirement annuity requires two-thirds of the investment to be invested into a post-retirement product that earns income.

The Coronation living annuity plan will have to be applied for before a contribution can be made to the plan. An application can be made online on the Coronation website or by phone. The application will require certain information to be provided, which includes personal information and more. 

Beneficiaries will also need to be nominated for the investment plan. These individuals will benefit from the living annuity should the account holder outlive the product. The withdrawal after the death of an account holder will incur estate duty tax. 

After a successful application to the account, the money in the account will be invested into one or more of the funds available. The applicant will have to choose which funds to invest in and how much will be apportioned into each unit trust. The performance of the investment plan will be determined by the performance of the money invested in the unit trusts. 

Money in the living annuity is available immediately after making an investment. Withdrawals can be made from the plan on a monthly, quarterly, bi-annually or yearly basis. Withdrawal from the investment plan is limited to a minimum of 2.50% to a maximum of  17.50% per annum. 

Income from the Coronation living annuity is not guaranteed and is solely derived from the performance of the unit trusts invested in. Furthermore, the capital invested is also not guaranteed and can be lost due to the performance of the unit trusts. 

Advantages of the Coronation living annuity

  • There are several unit trusts available to choose from. These unit trusts are known to outperform the market, and some have won local and/or international awards.
  • There is no taxation on interest or dividends.
  • Withdrawals are limited so that the investment plan can last for a longer period.
  • There are no initiation fees or administration fees involved.
  • Money can be moved from one unit trust to another without incurring costs.
  • If the account holder dies before exhausting the investment, the remaining investment will be shared by the beneficiaries.
  • The minimum contribution to the investment plan is considerable.

Disadvantages of the Coronation living annuity

  • Income is not guaranteed to last for a lifetime.
  • Capital invested in the Coronation living annuity is not guaranteed and it can be lost.
  • There is no interest guarantee like that which can be found on fixed deposit accounts.

Conclusion

A living annuity from Coronation is a good investment plan and provides investors with the opportunity to invest and earn income after retirement. The product invests in some of the best-performing unit trusts in South Africa and the world, making it an investment-worthy for a retirement income.

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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
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