Unhappy with your RA? Go on then, switch it

Isaac Moledi

Isaac Moledi

Is your retirementannuity (RA) giving you the investment growth you expect?

If not, why not switch your portfolio to an alternate fund manager or institution ?

Bernard Jacobs Mellet Private Client Services says up until now RA investors have been in a "Catch22" situation, where the specific underlying rules of a retirement annuity fund prevented them from switching.

But this has been reversed after the Pension Funds Adjudicator's recent landmark ruling, which enables RA policy owners to transfer their policies before retirement age.

The adjudicator ruled recently that not allowing investors to transfer their portfolio was contrary to the rules of the South African RA fund, the Pensions Fund Act and the Financial Institutions Act.

These pieces of legislation impose an obligation to act in the best interests of the investors , said the adjudicator.

In addition, the Income Tax Act allows for translocation of benefits. That is why, according to BJM, it is not correct for trustees to restrict transfers by implementing archaic and unfair fund rules.