No, I can invest in a wide range of products, including both internal and external funds as show below. This includes options like offshore investments, securities, and unit trusts. For more details, please visit my Investment Solutions page.

For all Momentum’s investment products or Fund Fact sheets please visit here.

For Local Funds, click here

For Offshore funds, Click here

Determining the right amount to save for retirement requires a comprehensive approach that takes into account your lifestyle goals, current expenses, and desired retirement age. Here’s how we can work together to create a tailored savings strategy:

1. Assess Your Financial Situation: We’ll start by evaluating your current income, expenses, and savings. This foundational step will help us understand your financial landscape.

2. Define Your Retirement Goals: Together, we’ll discuss your vision for retirement. What kind of lifestyle do you want? Will you travel, relocate, or pursue hobbies? Understanding your goals will help us estimate the funds you’ll need.

3. Calculate Future Expenses: We’ll project your expected expenses during retirement, taking into account factors like healthcare costs, housing, and leisure activities. This helps create a realistic picture of your financial needs.

4. Factor in Inflation: It’s essential to account for inflation when planning your retirement savings. We’ll use historical data to project how inflation might affect your purchasing power over time.

5. Tailored Savings Strategy: I employ a unique approach to retirement savings that sets me apart from traditional methods. By leveraging specialised Financial Needs Analysis (FNA) software, we can analyse various scenarios and investment options. This, combined with my expertise, allows us to craft a customised investment strategy that aligns with your goals, risk tolerance, and time horizon. Together, we’ll ensure you’re on the best path to achieve a secure and fulfilling retirement.

By working together, we can ensure you’re well-prepared for a secure and fulfilling retirement. If you have any questions or want to start this process, feel free to reach out!

Here’s an overview of the tax advantages and implications of contributions to retirement funds in South Africa, which can be discussed in depth:

Tax Deductions on Contributions

In South Africa, you can deduct up to 27.5% of your annual taxable income contributed to a retirement fund, which can include a combination of provident funds, pension funds, and retirement annuities. This deduction is capped at a maximum of R350,000 per year. Contributions made in excess of this limit are categorised as “disallowed contributions,” which can be optimised at retirement.

Benefits of Contributions

1. Tax Refunds: Contributing to a retirement annuity (RA) allows you to benefit from tax refunds. For example, if you invest R1,000 and your tax rate is 25%, you effectively pay R750 after receiving a R250 refund. Reinvesting this refund can significantly enhance your investment over time.

2. Once-off Contributions: To maximise tax benefits, consider making additional once-off contributions before the end of the tax year. This approach can help increase your total contributions and, consequently, your tax refund.

Disallowed Contributions

If you invest more than the allowable limits, these excess contributions can help reduce or neutralise tax on income received from living annuity payments. Until the disallowed contributions are fully utilised, income drawn from a living annuity can be received tax-free, which means you can enjoy more disposable income during retirement.

Implications of Disallowed Contributions on Death

In the event of death, the treatment of disallowed contributions depends on the actions of the beneficiary. If the beneficiary opts for a cash payout from the retirement annuity, those funds will be included as part of the estate and subject to estate duty tax. However, if the beneficiary chooses a living annuity instead, the disallowed contributions will not be included in the dutiable estate.

If you’d like to explore these concepts further or have specific questions about how they apply to your situation, please feel free to contact me.

Understanding Compound Interest: Compound interest is a powerful tool that significantly boosts your retirement savings. It works by earning interest on both your initial investment and the interest that has already accumulated. This creates an exponential growth effect that can greatly enhance your savings over time.

Comparing Investment Options: While endowments and fixed deposits may appear to be safe options, they typically offer lower interest rates, which can restrict the potential growth of your savings. For instance, endowments are taxed at a flat rate of 30% on investment returns, and they do not qualify for a SARS tax rebate, leading to a potential loss of money. In contrast, by opting for a diversified investment strategy, you can effectively leverage the benefits of compound interest, allowing your money to work harder for you and resulting in faster growth. Additionally, endowments often involve penalties for early withdrawals, making them less flexible compared to other investment options.

The Power of Early Investing: The earlier you begin investing and allowing your savings to compound, the more substantial your retirement nest egg will become. This strategy can lead to a more secure and fulfilling retirement, providing you with the financial freedom to enjoy the lifestyle you desire.

Next Steps: If you’re interested in exploring how compound interest can specifically impact your retirement savings, feel free to reach out. I’d be happy to discuss tailored investment strategies with you!

Incorporating offshore investments into your retirement strategy can significantly enhance your portfolio’s diversification and potential returns. Here’s how it works:

Benefits of Offshore Investments

1. Diversification: Offshore investments provide exposure to international markets, which helps mitigate risks associated with local economic fluctuations. By investing in foreign assets, you can tap into growth opportunities that may not be available domestically, broadening your investment horizons.

2. Risk Mitigation: Having a portion of your retirement savings in offshore investments can protect your portfolio from adverse local market conditions. This strategic approach allows for a more balanced risk profile, which is crucial for long-term financial security. However, it’s important to note that investing internationally can also carry risks; if international markets decline, your investments could suffer as well. This dual nature of risk underscores the need for careful planning, which is why Regulation 28 was implemented.

Understanding Regulation 28

Regulation 28 of the Pension Funds Act plays a vital role in your retirement strategy. It aims to safeguard retirement savings by limiting exposure to various asset classes within retirement funds, such as retirement annuities, pension funds, provident funds, and preservation funds. Here are key aspects to consider:

1. Investment Limits: Regulation 28 encourages a diversified portfolio by capping investments in certain asset classes. This regulation helps reduce investment risk, promoting more stable and sustainable long-term growth.

2. Informed Investment Choices: Familiarising yourself with these limits can empower you to make informed decisions regarding your retirement savings. Understanding how to navigate these regulations while incorporating offshore investments can enhance your strategy.

Strategic Approach

Combining the benefits of offshore investments with the principles of Regulation 28 creates a comprehensive and balanced retirement planning strategy. By doing so, you can maximise growth potential while effectively managing risk in your retirement portfolio.

If you’re interested in exploring how to incorporate these strategies into your retirement planning, feel free to reach out for an in-depth conversation!

While your employer-sponsored retirement savings are beneficial, a retirement annuity provides additional flexibility and control over your investments.

Understanding how Employee Benefits Contributions normally work can answer your questions.

It’s essential to grasp how your employee benefits contributions work. For instance, if your total monthly contribution to your group benefits is R1,000 and R600 goes towards risk benefits, only R400 is allocated to your retirement savings. This allocation often leads to a shortfall, as statistics show that around 80% of South Africans are not saving enough through their current employee benefits to secure a comfortable retirement. Therefore, additional savings, such as through a retirement annuity, can be crucial for bridging this gap.

Here’s additional reasons why considering a retirement annuity could be advantageous:

• Additional Flexibility and Control

A retirement annuity offers greater flexibility and control over your investments compared to employer-sponsored plans. You can choose the specific investments within the annuity, allowing you to tailor your portfolio to better suit your risk tolerance and financial goals. This level of control can be beneficial, especially if your employer’s offerings are limited.

• Diversification of Investment Options

Employer-sponsored plans may focus on a limited range of investment options. A retirement annuity enables you to diversify your portfolio further by incorporating a wider array of assets, including offshore investments and various fund types. This diversification can enhance your growth potential and help mitigate risk.

• Alignment with Personal Retirement Goals

Retirement annuities can be structured to align specifically with your retirement objectives. Whether you’re looking to retire early, generate a steady income stream, or preserve your capital, a retirement annuity can be tailored to meet those needs, providing a more robust strategy than relying solely on employer benefits.

• Tax Advantages

Investing in a retirement annuity can also offer tax benefits, as contributions may be tax-deductible up to a certain limit. This can help reduce your taxable income while boosting your retirement savings.

Conclusion

By complementing your employer-sponsored retirement savings with a retirement annuity, you can create a more comprehensive and personalised retirement strategy. This approach ensures you’re better prepared for your future financial needs.

If you’d like to discuss how a retirement annuity can fit into your overall retirement plan, feel free to reach out for an in-depth conversation!

Maximising your tax refund on retirement annuities is a strategic way to enhance your retirement savings. Here are key steps to consider:

1. Maximise Your Contributions: You can contribute up to 27.5% of your annual taxable income to retirement annuities, with a maximum deduction limit of R350,000. By reaching these limits, you can significantly reduce your taxable income.

2. Utilise Disallowed Contributions: Contributions that exceed the 27.5% limit are classified as “disallowed contributions.” While these cannot be deducted annually, they can be utilized during retirement to reduce tax on living annuity income payments. This can provide you with tax-free income until the disallowed contributions are exhausted.

3. Make Regular and One-Off Contributions: To maximise your tax refund, consistently contribute to your retirement annuity. Additionally, consider making one-off contributions before the end of the tax year. For example, if you contribute R1,000 and your tax rate is 25%, you can receive a refund of 25%, making the net cost of your investment only R750. Some savvy investors even reinvest their refund portion to create a snowball effect, allowing their savings to continue compounding until retirement. This approach can effectively be seen as the government paying you to retire while simultaneously lowering your tax bracket.

4. Plan for the End of the Tax Year: Savvy investors often add extra contributions to their retirement annuities just before the tax year ends to take full advantage of tax deductions.

This proactive approach not only helps in maximising tax refunds but also builds a more substantial retirement nest egg for your future. If you’re interested in tailoring a strategy to boost your tax refund and enhance your retirement savings, feel free to reach out for a more detailed discussion!

Taking out a retirement annuity (RA) for a minor child can be a strategic financial decision aimed at securing their future. Here are several key reasons why this option may be beneficial:

1. Long-Term Investment Growth: By investing the minimum monthly contribution to a RA for a term of, let’s say, 18 years, your child can be positioned ahead of most adult South Africans. The power of compounding allows for substantial growth over time, providing a solid financial foundation by the time they reach adulthood.

2. Tax Advantages for Parents: According to Section 11F of the Income Tax Act, premiums can only be deducted if the parent is both the premium payer and the owner of the annuity. However, parents can utilise a donation tax deduction, allowing them to donate up to R100,000 per year without incurring donation tax. Additionally, the growth from a RA is non-taxable, meaning parents do not need to include interest and dividends in their own tax returns.

3. Tax Advantages for the Child: Growth within the annuity remains tax-free, enhancing the child investment value over time. However, the situation regarding tax benefits can be complex. In short, excess contributions cannot be used as deductions against the child’s income when they start earning. Deductions require the member of the fund (the child) to have taxable income to offset. Since the child is not earning any income initially, they won’t directly benefit from these contributions in terms of tax deductions or credits until they begin earning taxable income. There are ways a child can still benefit from tax advantages, but this would require a more informed discussion. Please contact me for further details.

4. Financial Discipline: Setting up a retirement annuity for a child instils a sense of financial responsibility and discipline from a young age. It encourages them to understand the importance of saving and investing for the future.

5. Supplementing Future Financial Goals: The funds accumulated in the retirement annuity can serve various future financial needs, such as funding higher education, starting a business, or contributing to a first home purchase.

6. Peace of Mind: Parents often seek to ensure their children’s financial well-being. A retirement annuity acts as a form of financial security, knowing that you are proactively planning for their future.

If you’re considering this option for your child and want to understand how it fits into your broader financial strategy, I invite you to reach out so we can discuss it in more detail. Visit my contact page to schedule a meeting!

Absolutely, I would be happy to help you evaluate your investment. Here’s what I can offer:

1. Comprehensive Review: I will conduct a thorough assessment of your current investment strategy, including performance metrics and growth rates. This will help us understand how well your investments are performing relative to market standards.

2. Fee Analysis: I will examine the fees associated with your investment. Understanding all costs involved is crucial, as high fees can significantly erode your returns over time.

3. Benchmarking: I’ll compare your investment returns against similar products in the market. This will give you insight into how your investment stacks up against competitors.

4. Portfolio Diversification: I’ll evaluate whether your current portfolio is appropriately diversified, which can reduce risk and potentially enhance returns.

5. Long-Term Strategy: Together, we can discuss your financial goals and assess whether your current investment aligns with your retirement objectives.

If you’d like to proceed, feel free to reach out, and we can schedule a time to discuss this in more detail. Looking forward to assisting you!

I strongly advise against withdrawing from your retirement savings under the new two-pot system. Historically before the two-pot system, about 94% of South Africans were not on track for a comfortable retirement (Comfortable means they can’t afford minimum amount for expenses and cost of living), and accessing your savings now could worsen this situation. Withdrawing funds from your retirement savings can deplete your balance and prevent you from achieving potential growth. To secure a stable future, it’s crucial to preserve your retirement savings. If you have any questions or need assistance with your retirement planning, please feel free to contact me.

Momentum offers an exceptional Withdrawal Calculator that helps you understand exactly how much you will receive after tax and deductions if you choose to withdraw from your retirement savings. This tool also shows the long-term impact of withdrawing from your retirement, allowing you to make informed decisions that align with your financial goals.

Savings component calculator

FAQs on South Africa’s New Two-Pot Retirement System

1. How does the two-pot system improve retirement savings adequacy in South Africa?
   Before September 1, 2024, members facing financial hardships had to resign to access their pension or provident fund benefits, which often drained their savings. The two-pot system allows members to access a portion of their funds without resigning, addressing immediate needs while preserving a portion for retirement. This ensures more funds remain for retirement, helping with long-term savings adequacy.

2. How will funds be sourced for the new savings component, and how does it affect existing retirement funds?
   Starting September 1, 2024, a new savings component will be seeded with 10% of a member’s total benefits from their vested component, capped at R30,000. This applies to all existing retirement contracts, including Pension and Provident Preservation Funds and Retirement Annuities. These funds will remain in proportion, without disinvesting assets, and a new contract will be issued for this savings component. Members can access these funds once a year, with a minimum withdrawal of R2,000, and the funds will be subject to taxation.

3. What are the criteria and limits for withdrawing from the savings component before retirement?
   Members can withdraw from the savings component once per tax year without needing to provide a reason. The minimum withdrawal amount is R2,000, and the entire balance of the savings component is accessible. These withdrawals are taxed at the member’s marginal tax rate.

4. What can members withdraw from their pension or provident fund upon resignation or retrenchment, and how is it taxed?
   Upon resignation or retrenchment, members can access their full vested component, taxed according to the lump sum withdrawal tax table. They can also withdraw from the savings component if no previous withdrawal was made during the tax year and the balance exceeds R2,000. The savings withdrawal benefit is taxed at the member’s marginal tax rate.

5. How will the two-pot system impact the tax treatment and future withdrawals from retirement savings?
   Withdrawals from the savings component will be taxed at the member’s marginal rate, while the retirement component will be taxed according to the lump sum retirement benefit tax table at retirement. Annuity income from the retirement component will also be taxed at the member’s marginal rate. Early withdrawals from the savings component may incur higher taxes compared to retirement withdrawals and reduce future retirement savings growth.

How Does the Withdrawal from the Savings Component (Two-Pot System) Work?

Members can withdraw the entire amount in their savings component without a set maximum limit on withdrawals, offering flexibility in accessing funds as needed. However, there are important criteria to consider when withdrawing funds from the savings component before retirement.

Members are allowed one withdrawal per tax year per contract from the savings component without needing to provide a reason. The withdrawal must meet a minimum threshold of R2,000 and will be subject to tax based on the following details:

• Taxable Amount: The entire withdrawal amount is taxable.
• Marginal Tax Rate: The tax is based on the member’s marginal tax rate, with no tax-free portion available.
• SARS Determination: The tax payable will be determined by SARS, using current client information supplemented by the previous year’s data.
• Tax Year Inclusion: The withdrawal amount is included in the tax calculations for that specific tax year.

For instance, if a member has a fund value of R300,000 and decides to withdraw R30,000, and they have a taxable income of R1,000,000, the applicable marginal tax rate of 41% will apply. In this scenario:

• Tax Deducted: R12,300.
• Additional Administrative Costs: R200.
• Net Payment: The member will receive a net payment of R17,500 (R30,000 – R12,300 – R200).

This example highlights the importance of understanding the tax implications of withdrawals, as they can significantly impact the final amount received.