The Old Mutual retirement plan is a savings vehicle that offers a product that outperforms inflation. The plan invests in a unit trust managed by Old Mutual. The unit trust invests in instruments that range from low to high risk, and it is known to beat South African inflation over time.
Anyone over the age of 18 can join the Old Mutual retirement plan. The plan may be adjusted to fit one’s specific retirement requirements. Contributions to the plan must last until the investor reaches a certain retirement age. Retirement can begin as early as 55 years of age, but it can also begin at any age after that.
The Old Mutual retirement plan follows the regulations outlined in Regulation 28 of the Pension Funds Act 24 of 1956 just like any other retirement annuity. When investing in the unit trust, the regulations will have an influence on the investments. This is due to the fact that the regulation limits investor exposure to overseas investments.
Since payments must be made until one reaches retirement age, if one is having difficulty making contributions, a break may be granted. Any member of the Old Mutual retirement plan is eligible for a premium holiday (break). This holiday can be taken at any time when one is having financial difficulties.
The Old Mutual retirement plan offers a traditional retirement annuity with a number of advantages. Read on for a detailed analysis of the product and how it works to better understand it. The product is explored in more detail below.
Old Mutual retirement plan summary
The Old Mutual retirement plan is an inflation-beating retirement annuity designed for long-term savings. The product’s monthly premiums start at R400.00. Everyone above the age of 18 can purchase the product.
Investors can benefit from tax benefits under the plan both before and after they reach retirement age. The minimum retirement age for the program is 55 years old. However, the investor can also choose any retirement age over 55.
Investors who invest in the Old Mutual retirement plan must contribute to the plan until they reach the designated retirement age. Premium breaks, on the other hand, are offered to investors. With the help of a premium holiday benefit, the investor can miss up to six premium payments over the course of the plan.
After taking a payment holiday, the investor will be qualified for another premium break if they pay off all of the outstanding premiums. There will be a premium break of up to six months each time the unpaid premiums are paid.
The goal of investing in the Old Mutual retirement plan is to always outperform inflation. This provides the investor with the retirement income he or she requires. The money is put into an Old Mutual Smoothed Bonus Fund, which is managed by Old Mutual. The Smoothed Bonus Fund has a track record of outperforming inflation over time.
Withdrawals from the retirement plan are not permitted before the age of 55, which is the minimum retirement age. The plan’s savings and interest are intended for retirement and can only be accessed during that time. The funds from the plan will be passed on to the beneficiaries if the policyholder dies before retirement.
How the Old Mutual retirement plan works
The Old Mutual retirement plan cannot be purchased wholly online; instead, a callback request or an application must be submitted in person at an Old Mutual location. The product necessitates a simple application that requires basic personal information and the desired retirement return. The monthly premiums will be influenced by the preferred retirement income and current age.
The retirement plan becomes active when you have successfully submitted an application. The next step is to make monthly premium contributions to the plan. Debit order deposits will be used to make contributions, which will be deducted from the investor’s personal account.
The account’s minimum contribution starts from R400.00, while the maximum contribution can be any sum more than R400.00. Contributions must be made on a monthly basis until a certain retirement age is reached. The retirement age is defined as whatever age that an investor chooses, starting at 55 years old.
Investors can take advantage of a six-month lifetime premium holiday. When the plan’s outstanding premiums are paid, the premium holiday is extended for another six months. Premium holidays are free of charge, and any outstanding amount is carried forward.
Advantages of the Old Mutual retirement plan
- There are no medical examinations required.
- Money is invested in the plan for a long time, resulting in considerable savings and interest.
- Interest is capitalized in order to increase earnings.
- When compared to certain other retirement annuities in South Africa, the R400.00 minimum contribution is low.
- The worldwide exposure of the investment is cautioned by Regulation 28 of the Pension Funds Act, which allows the plan to invest in low-risk investments.
- The fund in which the money is placed has regularly outperformed inflation in the long run, making it a secure long-term investment.
- All policyholders have the option of taking a 6-month premium holiday.
- Contributions to the product are tax deductible.
Disadvantages of the Old Mutual retirement plan
- The plan cannot be completely applied for online and must be completed over the phone.
- The Smoothed Bonus Fund’s performance determines the desired retirement income, which may or may not grow as expected.
- When taking out a loan, the product cannot be used as collateral.
The Old Mutual retirement plan is one of the most secure retirement plans available. While there are no guarantees, the fund in which the plan invests has a track record of producing positive returns over time. This will assist in retiring with a sum of money equal to or more than the targeted pension.