Question:
I have a Old Mutual RA which has matured as of the 2nd May 2014. At the age of 55 I took the one third two thirds option. Now at the age of 65 I have elected for the full cash payout but Old Mutual now state that this option is no longer valid as I chose the 1/3 2/3 option previously.....is this legal?
Answer:
David, With a retirement annuity, it is compulsory that you use at least two thirds to purchase an annuity. You can choose between a living and a guaranteed annuity. If you choose a guaranteed annuity, you secure an income for life, but you lose your capital. You cannot change you mind later on, and decide to take any remaining capital, because there is no remaining capital. If you bought a living annuity, you retain your capital, and you draw down from this capital, but it is for all intents and purposes "locked in". You can only draw the residual capital from the annuity if it falls below R75 000 (or R50 000, if you took one third of the original retirement annuity as cash).
