- At retirement, you instruct your retirement fund to transfer all or part of your fund balance to the living annuity of your choice.
- You decide which investment funds to invest in within the living annuity. You should do this with the help of a qualified financial advisor.
- You can change the underlying investment funds in your living annuity whenever you wish by switching between the fund options. You can also hold a mix of funds at the same time and some living annuities allow a personal share portfolio as the investment fund.
- You decide how much income you want and the frequency of payment within upper and lower income limits. Here’s how the income works:
- Over a year, your income may not exceed 17.5% of the starting balance in the investment and it may not be less than 2.5%.Your income can be paid monthly, quarterly, twice a year or annually.
- At every anniversary of the start date of the Living annuity you can change the income amount and payment frequency within these limits, using the fund balance at the anniversary to calculate the income percentage.
- You can nominate beneficiaries to receive the balance in the fund when you die:
- Your beneficiaries can take their share as a lump sum, which may be subject to tax, or they can transfer to a new living annuity with their own choice of income and investment funds.
- There is no estate duty on the proceeds of living annuities and if you nominate a beneficiary, they are paid directly from the investment at your death. This avoids the delay and cost of funds being processed via the estate accounts.