An annuity, commonly known as a pension, provides you with an income during your retirement years. At retirement you may have the option to use some (or all) of your fund to purchase an annuity. The amount of income you receive from an annuity depends on the size of your fund and the annuity rates in force when you buy your annuity.
An annuity is an attractive option particularly if:
- your retirement fund is your main source of income in retirement.
- Your main priority in retirement is to have the knowledge of having a secure regular income for your retirement years.
An Approved Retirement Fund (ARF) is a flexible arrangement that allows you to remain invested in funds after retirement and withdraw money as and when you wish. Any investment growth within the fund is currently tax free, however, withdrawals are taxed.
With an ARF you can:
- draw a regular income, or make withdrawals when you want - although the frequency and size of your withdrawals will impact the length of time your ARF can provide you with an income in retirement.
- pass on the remaining value of your fund to your dependants or other beneficiaries on your death.