UCTRF Retirees Workshop Yvette Harris | Somila Putuma - Simeka - - PowerPoint PPT Presentation
UCTRF Retirees Workshop Yvette Harris | Somila Putuma - Simeka Consultants & Actuaries 26 September 2019 FAIS Acknowledgement & Advice Disclaimer Yvette Harris and Somila Putuma are the Benefit Consultants, employed at Simeka
Yvette Harris | Somila Putuma - Simeka Consultants & Actuaries 26 September 2019
Default regulations became effective 1 March 2019
an annuity strategy that is suitable for its members
least 3 months before normal retirement date
Advisory service
Your Retirement Benefit
Your Retirement Benefit
Defer Retire from the UCTRF later
Retire Retire NOW
Important: Although you have to retire from service by your normal retirement date, you can choose when you want to retire from the UCTRF
Defer Retire from the UCTRF later
Important:
member
platforms
STAY IN TOUCH
Defer Retire from the UCTRF later
Age Average Pension Amount 55 R 4 650 60 R 7 970 65 R 13 897 70 R 24 829
R 1 000 000
Investment return assumption of CPI plus 4%
Retire Retire NOW
How much cash should you take? What type of pension (annuity) should you buy? From whom?
Retire Retire NOW How much cash should you take?
Important:
Retire Retire NOW How will my cash portion be taxed? Lump Sum tax table
Taxable income (R) Rate of tax (R) 0 – 500 000 0% of taxable income 500 001 - 700 000 18% of taxable income above 500 000 700 001 – 1 050 000 36 000 + 27% of taxable income above 700 000 1 050 001 and above 130 500 + 36% of taxable income above 1 050 000
Annuity Estimates assumptions:
UCTRF negotiated estimates obtained in respect of
alternative estimate allowing for your specific circumstances Important:
Amount available Retirement benefit available for the pension (already explained) Gender Females higher life expectancy than males resulting in a smaller starting pension Age How long you are expected to live and be paid a pension Guarantee period 5 years i.e. 100% of the pension will be paid for the first 5 years even if you pass away during this period Joint Life / Spouse’s pension 75% of your pension will be paid to your spouse should you pass away after 5 years (Female spouse assumed 3 years younger if actual DOB has been provided) Future increases According to the type of annuity - either inflation linked or a with profit annuity
Momentum Sanlam Liberty Initial monthly pension (before tax and any
R6 976 R5 741 R4 160
R 1 000 000 Increases Advantages Disadvantages
Pension increases are based on the inflation rate for the previous year. Guaranteed to keep up with inflation.
protected against increases in the cost of living.
are linked to inflation.
the inflation rate is low (or 0%).
Old Mutual Momentum Just Initial monthly pension (before tax and any
R6 443 R6 976 R7 015
R 1 000 000 Increases Advantages Disadvantages
Allows you to share (with the insurance company) in the investment profits made on your pension portfolio. Pension increases are determined by the insurance company, based on how your money in your investment portfolios grew.
performance is good.
investment returns are poor.
Health Lifestyle
Qualification process:
underwriting
enhanced annuity
STARTING PENSION
decrease in starting pension
A Bank Account
You control how much you put in Based on the amount you saved up to retirement, less any cash lump sum taken You control how it is invested Determined by the investment portfolio choice you make You control how much you take out Drawdown – size of your pension you choose annually 2.5% - 17.5%
You need to manage it! No Guarantees – your capital may run out!
Investment Returns (Positive)
Investment returns (negative)
Fees
You need to manage it! No Guarantees – your capital may run out!
You need to manage it! No Guarantees – your capital may run out!
Portfolio Name Portfolio Type Feature / asset class Objective Risk Profile Time Portfolio A Income Fund Money market instruments Inflation + 1% Low 0 – 2 years Portfolio B Smooth Bonus Fund Smooth returns; capital guarantee Inflation + 3% Medium 3 – 5 years Portfolio C Balanced Fund Market-linked Inflation + 5% High 7 Years Portfolio D Shari’ah Fund Complies with Islamic law Inflation + 4% Medium to High 5 – 7 years
Initial fees: Annuity payment fee R560.00 once-off Included in administration and / or investment fee Advice fee R0 if you use the UCTRF appointed advisor, GMI Generally negotiable up to 1.725% Some insurers allow members to transact without an advisor Annual fees: Annuity payment fee R14.05 per month Included in administration and / or investment fee Annuity administration fee R112 per month 0.75% first R250K 0.50% next R500K 0.25% above R75K Advice fee UCTRF is negotiating an attractive
Members can still use their own advisors. Generally negotiable up to 1.25% Some insurers allow members to transact without an advisor Investment Fee (minimum - maximum) 0.2% p.a. - 0.90% p.a.
Initial fees: Annuity payment fee R560 once-off Included Advice fee R0 (if UCTRF advisor used) R0 - R17 250 Annual Fees: Annuity payment fee R168 Included Annuity administration fee R1 344 R5 000 Advice fee
Investment Fee (minimum – maximum )
Based on R 1 000 000
1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000 10 000 1 6 11 16 21 26
Monthly income (R) Drawdown period (years)
Life expectancy line Retail ILLA In-fund ILLA R1m capital, 7% initial draw down and 50% of CPI increases. Annual net return CPI+3.5% p.a.
Minimum Max recommended (single) Max recommended (dependants) Actuary’s maximum 2.5% 6.92% 6.29% 11.07% R2 083 R5 766 R5 242 R9 225
R 1 000 000
for spouse pension of 75% on death
Be careful of:
Net Investment Return
CPI plus 2.5% CPI plus 5% CPI plus 7.5%
2.5% 21 30 >50 5% 11 14 19 7.5% 6 8 10 10% 4 5 6 12.5% 2 3 3 15% 1 1 2 17.5% 1 1 1
Commercial Living Annuity
framework
annuities
The UCTRF Living Annuity
external life annuity
annuity later
If you want to transfer to another living or life annuity at a later stage S14 process with approval from FSCA applies – can take up to 6 months
Please Note:
FSCA = Financial Sector Conduct Authority
considered if you wish to explore an external combination
Very Important: Check when your pension will be paid and when your debit orders are as you might need to change the dates of these debit order.
Provider Date Momentum 25th Just 25th Old Mutual 25th Liberty Last day of month Sanlam Last day of month UCTRF Last day of month
Retire Retire NOW
SOAP Eligibility:
(married) p.a.
R2 230 800 (married)
Retire Retire NOW
Retiring members can convert their group life cover into a personal policy:
premiums were paid, the conversion option will be deemed to have been selected by the member
HR and UCTRF office provide information – not advice
retiring members Tips when appointing your own financial advisor