Why are retirement annuities important?
Most people save less that 15% of their salary in a retirement fund.
Most people save less that 15% of their salary in a retirement fund. Fund administrative costs further reduce the amount you are saving. This means that even if you are on a company retirement fund, you may not have enough money to retire comfortably. A retirement annuity is the ideal way to increase your retirement fund. They also have many advantages:
- Tax Benefits
The government want to encourage people to save for their retirement and have introduced many tax savings. Because of this retirement annuities remain one of the most tax-efficient ways of saving.
- Your contributions are tax deductible up to a certain amount.
- Due to recent government legislation there will also be no tax payable on the underlying assets of the investment. This will improve the growth of your retirement annuity.
- At retirement a certain amount of your lump sum will also be tax free.
- Independent of your Employer
A retirement annuity is independent of your employer so your retirement fund is not affected if you change jobs.
- Protected from Creditors
Your retirement annuity cannot be taken in a legal proceeding against you, to pay off debts. So your retirement is safe, even if something goes wrong financially in your life.
- Additional Payments
You can make ad-hoc payments to your retirement annuity based on your income to maximize the tax deduction you may claim.