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Saving for your retirement is supposed to offer at least some comfort that you\u2019ll have enough in your pension fund to see you through retirement. Unfortunately, this is a reality that\u2019s going to become more and more difficult to achieve for ordinary South Africans because of restrictions on retirement savings.<\/p>\n
And that is a huge problem. Not only for those saving for their retirement, but especially retirees with a living annuity.<\/p>\n<\/div>\n<\/div>\n A living annuity is a popular and simple way to receive your pension income every month. One of the big attractions is that these products aren\u2019t restricted by Regulation 28 of the Pension Fund Act as retirement investments are, which places restrictions on your asset allocation.<\/p>\n That means you can invest in any asset class and allocate your funds in accordance with your risk profile. Most importantly, you can invest 100% of your funds offshore as a way to preserve your buying power, which would be constantly eroded by inflation, currency weakness and lacklustre domestic returns.<\/p>\n Brenthurst Wealth has been a vocal critic of the damage being done to South Africans\u2019 wealth by policies such as this. So, it should be no surprise that we\u2019re still advocating that clients offshore their assets to the best of their ability.<\/p>\n But if platforms are reaching capacity in their offshore allowance then current and future clients might not be able to get the offshore exposure they need.<\/p>\n Alarms bells have rung over the past few years, as several notable platforms, such as\u00a0 Allan Gray,\u00a0 Sygnia and Ninety One to name a few, announced that they are now restricting the offshore allocation within Living Annuities, ranging between 60-40%, as opposed to the 100% offshore exposure allowed in terms of legislation.<\/p>\n In fact, we\u2019ve experienced this trend over the past few years with a number of platforms saying they can\u2019t help clients get their maximum offshore exposure.<\/p>\n This is not the case with all platforms however, so investors are not out of options yet, but we don\u2019t know how much longer that will be the case. For instance, the foreign assets will grow in value \u2013 and therefore increase their contribution to the whole \u2013 just by virtue of a weakening rand. Coupled with the fact that more and more investors are looking to offshore assets to protect against a continuing weaking rand, it\u2019s a matter of time before more investment platforms will be faced with the same dilemma of restricting offshore exposure.<\/p>\n Because this window to secure a decent retirement is closing, I\u2019m urging clients to take action now.<\/p>\n The danger is that your savings won\u2019t be able to keep pace with inflation and a weaking rand, placing you in a losing position if your income is reliant on domestic assets not growing fast enough.<\/p>\n Investors who have relied solely on local equity for growth have been extremely disappointed.<\/p>\n CASH \u2013 6.89%\u00a0<\/strong>per annum (P.A.)<\/em><\/strong><\/p>\n CPI \u2013 5.06% P.A<\/strong><\/p>\n JSE \u2013 8.15%<\/strong><\/p>\n If you consider that South Africa is a prominent importer of goods, then it\u2019s easy to see that everything from household goods to fuel, electronics, consumer goods and luxuries will only become more costly as time goes by. Without growth, in dollar and rand terms, of offshore assets I fear that even fewer South Africans will get the retirement they\u2019re hoping for.<\/p>\n So, if you\u2019re over the age of 55 and have been sitting on the fence over what to do with your retirement annuities or preservation funds, then time is running out to avoid a disaster.<\/p>\n There are a number of options open to you, depending on your circumstances, your goals and your current life stage. All these factors play into deciding of the best way to maximise your offshore exposure in spite of these new hurdles.<\/p>\n I encourage you to speak to your advisor or seek an advisor able to help you find a solution that works for you.<\/p>\n If you\u2019re over 55 you probably have greater flexibility in moving your funds into offshore assets because you\u2019re allowed to withdraw or redirect your retirement savings. This would be true of retirement annuities, but some pension funds only allow withdrawals at a later age.<\/p>\n It\u2019s unfortunate that we have to take the measures, because living annuities are ideal instruments to cater for your retirement. The reality, however, is that if these products cannot offer the level of offshore exposure needed, then you are better served looking for products or funds that do.<\/p>\n Saving for your retirement is supposed to offer at least some comfort that you\u2019ll have enough in your pension fund to see you through retirement.…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-1731","post","type-post","status-publish","format-standard","hentry","category-innov8ions"],"_links":{"self":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/1731","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/comments?post=1731"}],"version-history":[{"count":2,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/1731\/revisions"}],"predecessor-version":[{"id":1737,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/1731\/revisions\/1737"}],"wp:attachment":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/media?parent=1731"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/categories?post=1731"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/tags?post=1731"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/www.innov8fs.co.za\/blog\/wp-content\/uploads\/2024\/05\/Mags.Heystek-200x300.png\")
The most recent spanner in the wheel for folks planning and saving diligently for retirement is that some fund managers\u00a0and investment platforms<\/strong>\u00a0are reaching their limit of funds invested abroad, which are also affecting Living Annuities to some extent. The Pension Funds Act\u00a0restricts certain<\/strong>\u00a0funds to have no more than 45% of their assets invested offshore. So, once they get closer to that limit, they have to close off new investments into offshore assets.<\/p>\nLiving annuity fiasco<\/strong><\/h3>\n
Not all doom and gloom<\/strong><\/h3>\n
Time to take action<\/strong><\/h3>\n
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<\/p>\nSA vs the World\u00a0 \u2013 10 Years<\/strong><\/h3>\n
MSCI World \u2013 16.04% P.A.<\/strong><\/h3>\n
What to do<\/strong><\/h3>\n
Credit: Editor BizNews<\/h6>\n","protected":false},"excerpt":{"rendered":"