Nine good reasons why an UA is an excellent investment medium:

1. Contribution is deductible Contributions are deductible from taxable income for income tax purposes. At a limit of 40%, the Receiver in fact guarantees R40 of every R100 invested by the UAA medium.

2. Contributions that were not deductible may be transferred All contributions (or sections of contributions) exceeding the deductible limit may be transferred to the following tax year. Contributions not yet used for Taxes on retirement can be used to increase the tax-free portion of the available cash amount. Any other "unused" contributions can be deducted from the compulsory annuity for income tax purposes.

3. Tax-advantaged internal fund return Retirement annuity funds are exempt from income tax. In addition, the long-term insurance business operated by an insurer for the benefit of a retirement annuity fund is exempt from tax in the hands of the insurer.

4. Taxable lump sum at death or retirement The retirement-free lump sum at retirement was previously limited to R120 000. Now the first R315 000 is tax-free and the lump sum above is taxed at a favorable rate.

5. Benefits at death are exempt from estate duty At the death of the member all benefits are payable as a lump sum or an annuity, excluding his / her estate for estate duty purposes. It also follows that a linked (living) life rate free of estate duty is inherited by dependents. This benefit creates an attractive estate planning opportunity for a wealthy estate owner, as contributions to a US will reduce his / her taxable estate

6. Withdrawal from a pension fund Retirement from a pension fund can be transferred tax-free to an UA fund and in this way the accumulated retirement benefit is fully preserved.

7. Choices at retirement A conventional life annuity (with constant or increasing income) or a linked (living) annuity rate (or a combination of the two types) can be purchased at retirement. The choices made will depend on the client's specific needs and risk profile. A linked annuity is more risky but offers extraordinary benefits (eg tax-free internal capital formation; the capital can be inherited at the death of the mortgagor; the capital is never subject to estate duty; the capital is protected against creditors; certain limits are adjusted to meet changing income needs; it can be converted to a conventional annuity;

8. Provision of medical care after retirement An UA is the ideal medium for the payment of medical expenses after retirement.

9. Protection against yourself and creditors An UA provides protection against poor financial self-discipline, as well as protection in case of insolvency. The fact that there is no access to capital (except death and disability) before age 55 is a covered blessing as it ensures that the capital is available when it is needed and for which it is intended: The provision of income to retirement.

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Gariep Financial Planners

78 Smith Street

Aliwal North

Eastern Cape | South Africa

Gariep Financial Planners, an Authorised Financial Services Provider with FSP No. 15197

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