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.