The ultimate guide to optimising your retirement annuity benefits

WHILE the long-term benefits of investing through a retirement annuity should not be underestimated, there's a lot more to this retirement funding vehicle that investors should be aware of. In this article, we explore the many benefits of a retirement annuity (RA) and how to maximise these benefits in your investment portfolio.

- SHERRY TAPFUMA

Understanding the basics of an RA

While employer-sponsored pensions and provident funds remain the default retirement vehicles for many South Africans, a retirement annuity (RA) is a powerful individual investment option with distinct advantages. Available to anyone earning taxable income, a Registered Account (RA) offers a structured and tax-efficient way to save for retirement. It is particularly well-suited to the self-employed, contract workers, or those without access to a workplace fund.

Investors can contribute up to 27.5% of their taxable income annually (capped at R350,000) to an approved retirement fund—including an RA—and claim the contribution as a tax deduction. In addition, the underlying investments benefit from being exempt from tax on interest, dividends, and capital gains, making the RA structure one of the most tax-effective investment vehicles available.

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