1. You choose your income — You can choose how much income to withdraw, within the legal limits. You can change your income amount and frequency every year.
2. You have control and flexibility — You choose from our simple range of unit trusts and you can change your selection when you need to, no transaction fees and no penalties.
3. You can nominate beneficiaries — Any money left in your living annuity when you die can be left to your beneficiaries and can be paid immediately, without waiting for your estate to be wound up.

Is this for me?

Reasons a living annuity may not be suitable for you

1. Your income is not guaranteed. It depends on your investment value and the return you earn. If your investment value drops, or you do not earn enough return, you may need to draw a lower income than you would like.
2. If you withdraw too high an income, your investment might not last.
3. Investment performance fluctuates over the short to medium term. You take on the risk that your investment will not perform as you expect.

How do I decide whether a living annuity is right for me?

Deciding on a product that has to provide you with an income for the rest of your life is one of the most important financial decisions you have to make. If you don’t feel equipped to make this decision unaided, you should consider talking to an independent financial adviser.

An alternative product to consider is a guaranteed life annuity. When making this decision, consider your personal needs, your risk appetite and the key differences between the products available:

• In a living annuity, any investment return earned belongs to you and gives you the chance to increase your income over time. In a guaranteed annuity, your income is known in advance, and any additional investment return belongs to the product provider.
• A guaranteed life annuity will provide you with a specified income for a set period of time (usually until you die), while your income from a living annuity, and how long it will last, will depend on the return you earn and how much you choose to withdraw. If you draw too high an income, you may run out of money.
• The company that provides the guaranteed annuity carries all the investment risk. In a living annuity you take the risk that your investment will not perform as you expect, and that you may need to draw a lower income than you would like.
• Living annuities can be left to your beneficiaries when you die but guaranteed annuities cannot be passed on to beneficiaries.

—

Comparison

How does a living annuity compare to a guaranteed life annuity?

You choose your underlying investments

• With a Living Annuity: Yes
• With a Guaranteed Life Annuity: No
• Note: Your money in the Allan Gray Living Annuity is invested in your choice of unit trusts and you can earn return over time. In a guaranteed life annuity your money belongs to the product provider, who is required to pay you an income.

Your income is guaranteed

• With a Living Annuity: No
• With a Guaranteed Life Annuity: Yes
• Note: A guaranteed life annuity will provide you with a certain amount of income until you die, whereas your income can fluctuate and fall in a living annuity. If your investment falls far enough, a living annuity will end before you die.

You can change your income level and frequency

• With a Living Annuity: Yes
• With a Guaranteed Life Annuity: No
• Note: Once a year you can make adjustments in your living annuity. In a guaranteed life annuity you receive a set amount determined by the company providing it.

You can leave money to your beneficiaries

• With a Living Annuity: Yes
• With a Guaranteed Life Annuity: No
• Note: In a guaranteed life annuity your retirement savings belong to the product provider – i.e. you use the full amount to buy the product. With a living annuity, any money that is left in your investment can go to your beneficiaries, or your estate, when you die.

You can convert your annuity into a different type of annuity

• With a Living Annuity: Yes
• With a Guaranteed Life Annuity: No
• Note: You can convert your living annuity into a guaranteed life annuity, but you cannot convert your guaranteed life annuity into a living annuity.

You can transfer your annuity

• With a Living Annuity: Yes
• With a Guaranteed Life Annuity: No
• Note: You can transfer your living annuity to another provider. Your guaranteed life annuity cannot be moved.

—

FAQ

Frequently asked questions about retirement income through living annuities

What type of savings can I transfer into a living annuity?

A living annuity is legally restricted to only accept transfers from retirement funds:

• Preservation Funds
• Pension and Provident Funds
• Retirement Annuities
• Other Living Annuities

You may not add any every day savings (such as debit orders, lump sums from your bank account or other investments) to your living annuity.

How much income can I withdraw each year from my living annuity?

According to legislation you must draw between 2.5% and 17.5% of the value of your total investment per year. However, research has shown that your income has the best chance of lasting until you die if you withdraw a fixed rand amount (rather than a percentage) starting at 4% or less at retirement, and only increase the rand value of your income by inflation each year after that.

When can I change my income level and frequency?

You can change your income level and the frequency of your payments on the anniversary of the date that your living annuity was started. It is important that you remember to make the change on this date – otherwise you will have to wait until the next year to make changes.

Can I keep investing into my living annuity?

A living annuity is legally restricted to only accept retirement savings transfers. You cannot continue investing into your living annuity.

How is my living annuity taxed?

The return you earn in a living annuity is not taxed. However, your income is taxed at your marginal income tax rate, depending on the level of income you choose.

We will deduct the necessary tax from your income payment and pay this over to SARS on your behalf.

How much does it cost to invest in the Courtney Capital Living Annuity?

The fees depend on the unit trust you select. When you invest in Allan Gray, Coronation, Franklin Templeton unit trusts our investment management and administration fees are charged within our unit trusts and deducted before we publish the unit trust’s performance. This means that all the costs of investing in the Allan Gray Living Annuity are taken from these unit trust fees and no additional fees come off your initial investment, or from your investment balance as you go along. The return you see is what you get.

Can I move my living annuity from another provider to Courtney Capital?

You can transfer an existing living annuity from another provider to Allan Gray, or from Allan Gray to another provider. This is called a Directive 135 transfer.

You can also transfer your living annuity to a guaranteed annuity. However, if you already have a guaranteed annuity, you cannot transfer it to a living annuity.