Those under the age of retirement can invest and earn interest on their savings with the Allan Gray retirement annuity. The investor maintains the savings platform, and he or she has the option of investing in unit trusts operated by Allan Gray. When it comes to unit trusts, there are four to pick from.
Tax benefits arise with the Allan Gray retirement annuity, and contributions to the account are tax-deductible to some extent. This is because the goal of SARS is to encourage people to save for retirement. There will be no taxation on the capital and interest earned on this investment.
The Allan Gray retirement annuity investment can only be accessed once you’ve reached retirement age. However, there are some exceptions that allow funds to be withdrawn from the account. Withdrawal is permitted in the event of a disability or terminal disease.
It’s simple to invest in the Allan Gray retirement annuity. One can invest through the Allan Gray website or request a callback from the company. The investor will be responsible for managing the retirement annuity. When making an investment, one must be aware of the underlying investments available.
Having knowledge of the benefits of having the account and how it operates should be prioritized before opening the Allan Gray retirement annuity. The benefits of the account, as well as how it works, are detailed below.
Allan Gray’s retirement annuity summary
The Allan Gray retirement annuity is a savings platform that allows account users to receive interest on their savings by investing in Allan Gray‘s underlying investment vehicles. Only people under the age of 55 are eligible for the product. Those under the age of 18 are eligible to apply for the Allan Gray retirement annuity.
Monthly contributions for people who are over the age of 18 but under the age of 55 begin at R1000.00. Monthly contributions can be changed at any time, but they must not exceed the required minimum. Those who want to make a lump sum payment to the retirement annuity must contribute a minimum of R50,000.00.
Minors or those under the age of 18 are eligible to open an account. Contributions for persons under the age of 18 starts at R500 per month for a monthly contribution. For those under the age of 18, the minimum lump sum contribution is R20,000.00. The account can be funded with a combination of a lump sum and monthly contributions.
Contributions to the Allan Gray retirement annuity can be put into one or more of Allan Gray’s underlying investments. Investments can be made into one or more of the following unit trusts:
- 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
Anyone under the age of 55 can apply for an Allan Gray retirement annuity, however, those under the age of 18 must be represented by a guardian or adult. The beneficiaries of the account must be named when submitting an application. Anyone, whether direct or extended relatives or friends, can be a beneficiary.
The applicant will be expected to divide up the funds. Apportionment can be done per unit trust, and the applicant can contribute in the form of a flat sum or monthly instalments. The money invested in these unit trusts will not be made available until the investor reaches the age of 55, but there are various withdrawal exceptions.
An application will be issued to Allan Gray for the account. After that, an Allan Gray consultant will call the applicant to finalize the application. The consultant and the client will agree on the date on which the account will become active. The money must subsequently be deposited into the Allan Gray retirement annuity and allocated appropriately.
The performance of the money deposited into the unit trust(s) will determine the investment growth. If the unit trusts perform well, the investment amount will be increased. However, if the market performs poorly and the value of unit trusts falls, the amount invested will fall.
It’s worth noting that since their creation, the Allan Gray unit trusts have outperformed the market. Long-term investment losses are extremely unusual, but they do happen. Only investors over the age of 55 will be able to access the money invested plus 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.
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.