Retirement annuity
Can I get my money back if I cancel my retirement annuity?
It's important to understand that a Retirement Annuity (RA) is a long-term savings product designed to provide income in retirement. While you can't "cancel" an RA in the traditional sense, you do have options for accessing your funds under certain circumstances:
Continuing Your RA:
- An RA is meant to be kept until retirement age (typically 55).
- You can stop contributing at any time without penalty, but the funds remain invested.
Access Under the Two-Pot System (from 1 September 2024):
Savings Component: You can withdraw once per tax year, even if you're still employed or under 55.
- Intended for emergencies such as family or medical crises, urgent home repairs, legal issues, or natural disasters
- Minimum withdrawal: R2,000
- No maximum limit
- Withdrawals are subject to income tax at your marginal rate
- An administration fee applies to each withdrawal, with the exact amount depending on your provider.
Retirement Component: Remains inaccessible until retirement age.
Vested Component: Contains your pre-September 2024 savings. 10% (capped at R30,000) will be moved to your savings component. The rest remains subject to pre-2024 withdrawal rules.
Early Withdrawal Restrictions:
- You may not be able to withdraw if you have a pension-backed home loan, owe your employer for misconduct or theft, have a pending divorce order, or owe maintenance.
- If your savings component balance is R2,000 or less, you may be allowed to withdraw the full amount.
At Retirement Age (typically 55 and older):
- You can access your funds according to retirement withdrawal rules.
- Options include taking up to one-third as a lump sum (subject to tax) and using the rest to purchase an annuity for regular income.
Tax Implications:
- Any withdrawals or lump sums at retirement are taxed according to the retirement fund lump sum tax table.
- Regular annuity income in retirement is taxed as normal income.
Remember, accessing your RA funds early can significantly impact your retirement savings. It's crucial to consider the long-term consequences. Use our Two-Pot calculator to understand the impact of withdrawing from your retirement savings.
![Savings for Retirement, Income in retirement, Retirement Annuity, Investment, Preservation Fund, Retirement Planning, Savings for Retirement, Living Annuity, Performance Two pot calculator](/_next/image?url=https%3A%2F%2Fimages.ctfassets.net%2Fyqvz0zwovkbq%2FVXr66OmXVPeLkFQqt72S7%2F5a1ca289f2d9c31135fdc0fbd3420311%2F2-pot_1400_CTA.webp&w=2048&q=75)
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