Quick Facts

• Withdraw between 2.5% and 17.5% of your capital each year
• Must be at least 55 years old to start
• Fees usually range from 0.5% to 1.5% per year
• Money stays invested and can grow with markets
• You can leave remaining money to your family

What is a Living Annuity?

A living annuity is money you use when you retire. It gives you monthly income while your savings stay invested.

Think of it like this: You put your retirement money in. The money grows in investments. You take out a monthly salary.

Your money stays yours. If you pass away, your family gets what is left. This is different from other pension products.

How a Living Annuity Works

Step 1: You Retire

When you turn 55 or older, you can access your retirement savings. This money comes from your pension fund, provident fund, or retirement annuity.

Step 2: Choose Your Provider

You pick a company to manage your living annuity. Major providers include 10X, Allan Gray, Ninety One, Sanlam, and Old Mutual.

Step 3: Transfer Your Money

Under South African law, you must use at least two-thirds of your retirement savings to buy an annuity. You can take one-third as cash.

Step 4: Choose Your Investments

You decide where to invest your money. Options include shares, bonds, property funds, and cash. Most people choose balanced funds.

Step 5: Set Your Income

You choose how much to withdraw each year. The law says between 2.5% and 17.5% of your total capital. You can change this once per year.

Step 6: Receive Monthly Payments

You get money paid into your bank account. You can choose monthly, quarterly, half-yearly, or yearly payments.

Requirements to Start a Living Annuity

Age Requirements

You must be at least 55 years old. This is the minimum retirement age in South Africa.

Minimum Investment

Most providers need R50,000 to R100,000 minimum. Some accept less. Check with each provider.

Source of Money

Money can come from:

• Your employer’s pension fund
• Your employer’s provident fund
• A preservation fund
• A retirement annuity fund
• Another living annuity you already have

Documents You Need

• South African ID document or valid passport
• Proof of address (utility bill or bank statement)
• Bank account details
• Tax number from SARS
• Withdrawal benefit statement from your fund

⚠️ Important Withdrawal Rules

Minimum Withdrawal: 2.5%

You must withdraw at least 2.5% of your capital each year. This is the law. You cannot take less.

Maximum Withdrawal: 17.5%

You cannot withdraw more than 17.5% of your capital each year. This law protects you from taking too much.

The 4% Rule

Many financial advisers recommend withdrawing only 4% to 5% per year. This helps your money last longer.

When You Can Change

You can only change your withdrawal rate once per year. This happens on your policy anniversary date.

Cannot Cash Out

You cannot withdraw all your money as a lump sum. There is one exception: if your total value falls below R125,000.

Costs and Fees You Pay

Fees reduce your retirement savings every year. Lower fees mean more money for you.

Annual Administration Fee

This pays for managing your account and sending statements. Usually 0.2% to 0.4% per year.

Investment Management Fee

This pays for managing the investments. Usually 0.3% to 1.0% per year depending on the fund.

Financial Adviser Fee

If you use an adviser, they charge 0.5% to 1.0% per year. This is optional.

Total Fee Examples (2025)

Provider	Total Annual Fee
10X Investments	0.5% to 0.87%
Allan Gray	0.8% to 1.0%
Ninety One	0.7% to 1.2%
Sanlam/Old Mutual	0.9% to 1.5%
EasyEquities	0.6% to 0.9%

How Fees Affect Your Money

✅ Reputable Living Annuity Providers

10X Investments

Fees: 0.5% to 0.87% per year (very low)

Minimum: R50,000

Good for: People who want low fees and simple index tracking investments

Website: www.10x.co.za | Phone: 087 470 0000

Allan Gray

Fees: 0.8% to 1.0% per year

Minimum: R100,000

Good for: People who want active fund management and good track record

Website: www.allangray.co.za | Phone: 0860 000 654

Ninety One (formerly Investec)

Fees: 0.7% to 1.2% per year

Minimum: R50,000

Good for: People who want international exposure and variety

Website: www.ninetyone.com | Phone: 0860 500 100

EasyEquities

Fees: 0.6% to 0.9% per year

Minimum: R50,000

Good for: People comfortable with online platforms and want flexible investments

Website: www.easyequities.co.za | Phone: 0861 998 886

Sanlam

Fees: 0.9% to 1.5% per year

Minimum: R100,000

Good for: People who want full service and personal adviser support

Website: www.sanlam.co.za | Phone: 0860 726 526

Living Annuity vs Life Annuity

You have two main choices for retirement income. Here are the differences:

Feature	Living Annuity	Life Annuity
Income Amount	You choose and can change yearly	Fixed for life
Income Guarantee	Not guaranteed – can run out	Guaranteed for life
Investment Risk	You take all the risk	Insurance company takes risk
Money for Family	Yes – they get what’s left	Usually no (unless you pay extra)
Flexibility	Very flexible	No flexibility
Growth Potential	Yes – can grow with markets	Limited growth
Best For	People who want control and flexibility	People who want guaranteed income

🚨 Important Risks and Warnings

Risk 1: Your Money Can Run Out

This is the biggest risk. If you withdraw too much or investments perform badly, your money finishes before you die.

Example: John withdraws 15% per year. His investments only grow 6% per year. After 15 years, his money is gone.

Risk 2: Market Crashes Hurt You

When the stock market falls, your capital drops. If you keep withdrawing during a crash, you damage your future income.

Risk 3: Inflation Reduces Buying Power

Prices go up every year. If your investments don’t beat inflation, you can buy less each year with the same money.

Risk 4: High Fees Eat Your Savings

Fees above 1.5% per year seriously damage your retirement. Over 20 years, high fees can cost you hundreds of thousands of rand.

Risk 5: Making Bad Decisions as You Age

As you get older, making investment decisions becomes harder. You might make mistakes or fall victim to scams.

Common Scams to Avoid

• Guaranteed high returns: Nobody can guarantee 15% or 20% returns every year. This is always a scam.
• Pressure to transfer: Legitimate advisers never pressure you to move your money urgently.
• Offshore schemes: Be very careful of schemes promising tax-free offshore investments.
• Unregistered advisers: Only use advisers registered with the FSCA. Check at www.fsca.co.za

✅ How to Choose the Right Living Annuity

Step 1: Calculate How Much You Need

List all your monthly expenses. Add a safety buffer. This shows your minimum income need.

Step 2: Compare Total Fees

Ask each provider for the Effective Annual Cost (EAC). Choose providers below 1.2% if possible.

Step 3: Check Investment Options

Make sure they offer balanced funds. Check if they allow offshore investments (40-60% offshore is good).

Step 4: Read Reviews and Track Record

Check how long the provider has been operating. Look at their investment returns over 5-10 years.

Step 5: Decide on Financial Advice

Do you need ongoing advice? If yes, budget for adviser fees (0.5-1% extra). If no, choose low-fee index funds.

Questions to Ask Providers

• What is your total Effective Annual Cost?
• Can I invest offshore? How much?
• How often can I change my investment choices?
• What happens to my money when I die?
• Can I transfer to another provider later?
• Do you have any exit fees or penalties?
• How do I access my statements and information?

Tax Information

Tax on Transfers In

When you transfer money from your retirement fund into a living annuity, this transfer is tax-free.

Tax on Investment Growth

While your money grows in the living annuity, you pay no tax on the growth. This is a big benefit.

Tax on Monthly Withdrawals

You pay normal income tax on the money you withdraw each month. SARS treats it like salary.

2025 Tax Thresholds for Pensioners

• Under 65 years: First R108,000 per year is tax-free
• 65 to 74 years: First R168,000 per year is tax-free
• 75 years and older: First R188,000 per year is tax-free

Tax When You Die

Good news: money in your living annuity is not part of your estate. Your beneficiaries pay no estate duty on it.

Your beneficiaries can choose to receive a lump sum (taxed as retirement benefit) or continue the annuity.

⚠️ Important: If You Leave South Africa

Planning to emigrate or already living overseas? Your living annuity stays in South Africa. Here’s what you need to know:

You Cannot Cash Out

Living annuities cannot be cashed out, even if you emigrate. The only exception is if the value drops below R125,000.

Your Money Stays Locked

Your capital remains invested in South Africa. You cannot transfer it overseas as a lump sum.

Monthly Income Continues

You keep receiving your monthly income. It gets paid in Rand into your South African or overseas bank account.

Currency Risk

If the Rand weakens, your income buys less in your new country. Consider offshore investments within your annuity.

Tax Complications

You pay South African tax on withdrawals. Your new country might also tax this income. Get tax advice.

Your Consumer Rights and Where to Complain

Your Rights Under South African Law

• Right to clear information about fees and charges
• Right to fair treatment from your provider
• Right to transfer to another provider (though fees may apply)
• Right to change your withdrawal rate once per year
• Right to nominate beneficiaries who will receive remaining funds

Step 1: Complain to Your Provider First

Contact their complaints department. They must respond within 6 weeks by law.

Step 2: Escalate to FSCA

If not satisfied, contact the Financial Sector Conduct Authority.

Phone: 0800 110 443 (toll-free)

Email: info@fsca.co.za

Website: www.fsca.co.za

Step 3: Pension Funds Adjudicator

For disputes about pension fund transfers or annuity purchases.

Phone: 012 346 1738

Email: enquiries@pfa.org.za

Website: www.pfa.org.za

Report Fraud or Scams

If you suspect fraud, contact the FSCA fraud hotline immediately.

FSCA Fraud Hotline: 0800 203 722

Police (SAPS): 10111 or your local police station

✅ Your Action Checklist

Before choosing a living annuity, make sure you have done these steps:

☐	Calculated my monthly expenses and income needs
☐	Compared fees from at least 3 providers
☐	Checked that fees are below 1.2% per year
☐	Verified provider is registered with FSCA
☐	Decided on my withdrawal rate (recommend 4-5%)
☐	Chosen my investment funds (balanced funds recommended)
☐	Decided if I need a financial adviser
☐	Nominated beneficiaries for when I die
☐	Read all documents before signing
☐	Understand that this money cannot be cashed out

A living annuity gives you flexibility and control over your retirement money. But it also puts all the responsibility on you.

Choose a living annuity if: You have enough savings (at least R500,000), understand investments, want to leave money to family, and can handle market ups and downs.

Consider a life annuity if: You want guaranteed income for life, have limited savings, prefer no investment decisions, or are very risk-averse.

Our top tips:

• Keep fees below 1.2% per year – this is critical
• Withdraw only 4-5% in your first years of retirement
• Choose balanced funds for stability
• Review your strategy every year
• Never believe promises of guaranteed high returns
• Consider splitting money between living and life annuity

Most importantly: Take your time to decide. This decision affects your entire retirement. Get advice from a registered financial adviser if needed.

For more information, visit the Financial Sector Conduct Authority website at www.fsca.co.za or phone their helpline at 0800 110 443.