GeneralFAQs

Why do we use 6%? (Percentage of South Africans who will be able to retire comfortably.)

According to National Treasury only 6% of the population will have accumulated enough money to retire comfortably, without having to sacrifice their standard of living.

While National Treasury has cited this statistic, and it has been used multiple times in the media, the research backing up this statistic is not readily available. In addition to the 6% stated, 2% and 10% have been bandied around in the media. There are multiple factors which impact this statistic and it can be considered a moving target depending on these factors.

While the actual statistic cited may be invalid, be it 2%, 6% or 10%, what is indisputable is that the majority of South Africans are facing a retirement savings crisis. The specific number should not detract from the issue at hand. Using any of the above statistics, 90% of South Africans have not saved enough money for retirement.

How to invest with 10X Investments

Figuring out how to save for your future can be overwhelming. At 10X, we don’t complicate what can and should be simple.

We offer a single strategy because we believe it’s the best strategy. Here are a few frequently asked questions to help you get to grips with investing with 10X.

Which product should I choose? 

That depends on your current situation and your future goals. 10X offers various products, each with a clear purpose.

• The 10X Retirement Annuity is for someone who wants to save for their retirement. Retirement Annuities come with great tax benefits.
• The 10X Preservation Fund is for someone who has a pension or provident fund with their employer but is changing jobs and needs to move their money to a new fund.
• The 10X Living Annuity is for someone who is retiring and would like to reinvest their retirement savings and be paid a monthly income from those savings.
• The 10X Unit Trust is for someone who is saving for something other than their retirement and would like to have easy access to their savings.

How do I choose a fund for my investment product?

A fund is a grouping of assets such as shares, cash, bonds and property. For each product, you will be able to choose a fund.

The 10X Your Future Fund is suitable for investors seeking long-term capital growth that is achieved with cost-effective exposure to a range of local and international asset classes.

There are other funds for defensive investors or for investors looking for more international asset exposure.

See our Funds page for more information.

How do I sign up?

Signing up online is quick and painless. Head to our online investment portal and select the product you would like to sign up for. From there, simply follow the instructions. If you need to save and exit your application at any time you will be able to log in again and continue from where you left off.

Alternatively, you can contact us to speak with a consultant who can guide you to sign up.

What you need to know about EAC (Effective Annual Cost)

EAC was introduced by ASISA so that customers have one standard with which to measure and compare the total cost of owning and accessing an investment like a retirement annuity, including investment management, administration, advice, penalties for early termination, cost of loyalty bonuses and guarantees.

10X was set up to provide a simple retirement solution with one all-in fee for the client. In addition to the transaction costs, which every portfolio incurs in management of the underlying investments, 10X charges clients one flat fee that covers investment management and administration.

At 10X there are no penalties for leaving early (usually the clawing back of fees paid to financial advisers as an upfront lump sum to sell the product). There are no costs for loyalty bonuses or guarantees. The entire fee comes through in the Investment Management section of EAC and it is consistent across time. All of the additional costs that would have been paid to other providers are invested on behalf of the client.

A client could pay a financial advisor to invest with us; in this case his/her specific EAC would be higher. Our one solution is designed so that clients do not need to ask or pay for advice to select what fund they are invested in.

Why should I invest with an index fund instead of an active fund manager?

Index funds deliver better long-term returns than actively managed funds. In fact, statistics show that only 1 in 5 actively managed funds ever manage to beat the index.

What is a preservation fund?

A preservation fund is a retirement fund in terms of the Pension Funds Act. It is a tax-effective investment vehicle designed for individuals who wish to invest the proceeds of their company-sponsored retirement plan in a tax-efficient manner.

You may transfer the proceeds of your pension or provident fund to a preservation fund in the event you are dismissed, retrenched, or resign. Doing so preserves both your accumulated savings and the attached tax benefits. You can invest the proceeds from different pension or provident funds in either one or multiple preservation funds. You cannot, however, split the proceeds from one pension or provident fund across different preservation funds. You cannot make contributions to your preservation fund from other sources. Your investment will thus only grow in line with its net investment return.

Tax benefits: The state has a vested interest to stop you cashing in your retirement asset early and provides tax incentives, to keep you saving. Your transfer to a preservation fund is tax exempt provided you move your savings from a pension fund to a pension preservation (or RA) fund, or from a provident fund to a pension or provident preservation (or RA) fund. You also do not pay tax on the returns earned by your preservation fund and when you do draw your savings on retirement, you are taxed at favourable rates. These concessions fall away if you cash in early.

Why preserve? The primary objective of your pension or provident fund is to build sufficient wealth to sustain you once you retire. This wealth is built through your contributions and the return earned by your investments. To build sufficient wealth, you need to save diligently throughout your entire working life.

If you fail to preserve, you not only forgo your savings to date, but also the return these savings would have generated up to your retirement date. Investment returns compound over time, turning even modest savings into sizeable amounts after a few decades.

In the context of a diligent 40-year savings plan, the first thirteen years of saving will fund approximately half your pension.

The corollary to this: if you cash out after thirteen years, you risk cutting your retirement pension in half!

Accessing your preservation fund: You can make one partial or full withdrawal from a preservation fund, before age 55. After that, the balance can only be accessed at retirement, from age 55 onward. Your withdrawal is taxed per the withdrawal lump sum tax table below. You are allowed one early withdrawal in respect of each transfer to a preservation fund. Fig 1: taxation of cash lump sums on early withdrawals and at retirement

Source: South African Revenue Services

You can retire from your preservation fund(s) from age 55 onwards. You do not need to retire from your employer to do so. Once your balance exceeds R247,500, you can take a maximum of 1/3rd of your investment as cash (subject to tax); with the balance you must purchase either a compulsory annuity (Guaranteed Annuity or a Living Annuity) which will pay you a regular pension.

On death, your benefit will be allocated by the Fund Trustees according to the rules set out in the Pension Funds Act. The Trustees must ensure that all your financial dependents are considered. You can assist them by listing all such dependents in your beneficiary nomination form.  

If you do not leave any financial dependents, the Trustees will allocate the benefit according to your beneficiary nomination form. If you do not have any financial dependents and you fail to complete this form, the money will fall into your estate and will be distributed according to your will.

Any lump sum payment on your death will be taxed as a retirement benefit as though it had been received by you before your passing.

Transfers: You can transfer your preservation fund tax-free to another preservation fund, to an RA, or to your employer’s retirement fund. 

Costs are an important consideration with any investment.

The standard industry preservation fund can be very expensive as you may incur an initial charge of up to 4% of your capital, as well as ongoing investment management, platform, broker and administration fees.

With the 10X Preservation Fund, you are not required to use a broker, you can deal with 10X directly. We do not charge an initial fee and you only pay one annual investment management fee.

How long does it take for the fund to pay out the withdrawal benefit?

Provided your tax affairs are in order, and you have submitted all the required documents (such as a copy of your ID, a completed instruction form stating where the money should go, and proof of banking details), it normally takes 10 business days for 10x to pay out the funds. If it takes longer, you should follow up with our administrator to see what is holding up the process (or request your previous HR department to follow up on your behalf).