Crucial tips for South Africans on retirement planning - CNBC Africa

Crucial tips for South Africans on retirement planning

Southern Africa

by Aviwe Mtila 0

A solid retirement plan is essential for the good things in life for the later stages of life. Photo: Wikipedia.

With the world and the retirement industry constantly changing, caused by longer life expectancies and people getting married and divorced all the time, to mention a few causes, a solid retirement plan is essential for a prosperous future.

CNBC Africa spoke to Grant Van Zyl, a certified financial planner at The Wealth Room about the management of money and retirement planning, pension funds, living annuities and investments and savings.

READ THE HIGHLIGHTS FROM THE CONVERSATION BELOW OR WATCH THE VIDEO:

“I think retirement is most definitely tailor made for different individuals. Retirement annuity for example for someone that is self-employed, that doesn’t work for a corporate and they have to contribute to that for themselves, they can put it up to 27.5 per cent of their income into that fund and it’s totally tax deductible. To try and get another investment that’s going to beat that is highly unlikely.”

-          Grant Van Zyl, Certified Financial planner at The Wealth Room.

“There is also this new tax-free savings account but I think that was a big anti-climax, because people didn’t realise that if you have to do something like that it’s quite a long-term venture that you’re getting yourself into. However pension fund is there for those who are involved in an employer-employee relationship. There you’d obviously want to take as much advantage of that as possible.”

-          Grant Van Zyl, Certified Financial planner at The Wealth Room.

“The providence fund side of things, I mean COSATU and the government obviously have had a big clash regarding that. The ‘one third, two third’ rule when it comes to the provident pay-out has been put on hold for the next two years, but now you still get the tax deduction as an employee if you do contribute to the provident fund, so they’re really aligning the pension and the provident fund together.”

 

-          Grant Van Zyl, Certified Financial planner at The Wealth Room.

“To just go back to the tax-free savings account, I most definitely feel that there’s a big value of that. The R30 000 per annum or the R2 500 per month that you can put in there is definitely something that each person should have in their portfolio because all the growth in those funds are tax free. You can do switches free of capital gain tax and all those sort of stuff, so it’s definitely something I’m not dismissing, I just think it’s a little bit of an anti-climax to what we kind of expected it to be.”

-          Grant Van Zyl, Certified Financial planner at The Wealth Room.

“I think the retirement annuities and the pension funds, the providence funds, the catch with those are the liquidity side of things. The youngster of today or the savvy entrepreneur, they want to take their money and they want to plough it back into their businesses because their getting much better growth, and they obviously have the liquidity. So when it comes to the retirement space, it’s very hard to beat any of those vehicles because of the tax deductions. If you have to now try and challenge those, you’re going to have to get quite a considerable return to match that.”

-          Grant Van Zyl, Certified Financial planner at The Wealth Room.

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