Check out best annuity

STATISTICS reflect a low savings rate in South Africa and one of the key reasons for this is that individuals tend to postpone saving for their retirement until later in life.

STATISTICS reflect a low savings rate in South Africa and one of the key reasons for this is that individuals tend to postpone saving for their retirement until later in life.

This trend, coupled with increased life expectancy and the rising costs of living, generally leads to an insufficient accumulation of assets to retire with.

In addition, the past 18 months have been tough and consequently, looking ahead, it is likely that money market and fixed income funds are going to show lower returns.

They probably won't even beat inflation. For all these reasons, it is now more important than ever to make wise and informed financial decisions.

One of the more important decisions is deciding what to do with your retirement savings on the maturity of a Retirement Annuity policy. The insurance company writes to the policy holder advising them of their options at expiry date and the investor is given a choice of a range of annuity options.

But what the letter often fails to disclose is the option of shopping around the market for the best annuity.

When a Retirement Annuity matures, only one third may be taken in cash.

The remaining two thirds must be used to buy either a fixed pension or a Living Annuity.

Many people are unaware that one has the right to move an annuity from the current assurer to one that offers the highest annuity.

Regulators should insist that insurers emphasise the need to shop around when sending out maturity letters to the annuitant to ensure that the retiree is aware that there may well be higher rates available elsewhere in the market. In fact, the gain could be as much as 6pecent per annum.

One needs to calculate what this means in actual value over the rest of ones life, but be aware that rates change weekly.

My advice to anyone who has a Retirement Annuity maturing is to shop around, make the appropriate choice of either a Fixed Annuity or a Flexible Living Annuity.

For Fixed Annuities, one needs to understand the options with guarantees and the top rates available.

For Living Annuities, look at service, costs and investment options available.

In today's challenging economy, it is essential that one shops around. Remember that in retirement every cent counts.

l The writer is a director of Pioneer Financial Planning. Visit wwwpioneerfinancialplanning.co.za

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