Question:
Can I transfer a retirement annuity and a provident fund to a government savings bond?
Answer:
Bob,
You can only access your retirement annuity at retirement (earliest age 55). When you do, you have the option to commute one third of your investment balance into cash. At that point, you can use that cash to purchase a government savings bond. Your retirement annuity may give you the option to switch funds, and you could then consider allocating some of your savings to a bond fund, as an alternative. The advantage of a retirement annuity (rather than saving privately) is that the interest on the bond fund is not taxed whereas the interest on a government savings bond (or retail bond) held privately is taxed.
You can access your provident at retirement (earliest age 55) or when you leave your employer. Until then your fund manager will manage the money on your behalf. If you have a degree of investment choice, you can again allocate part of your money to a bond fund.
Retail bonds are designed primarily for investors saving in their own name (as a post-retirement option, for example). It is typically more tax efficient to save through a retirement fund. Be aware that the real (after-inflation) return from retail bonds is not that high. If you have a long investment time horizon (ie you are many years away from retirement), you should emphasise asset classes that have habitually delivered a higher real return over time (ie equities). Overweighting lower risk, lower yielding assets such as bonds is more appropriate for investors near retirement, who wish to preserve the value of their savings.
