Question:
Can I transfer a living annuity to another administrator, and if so, what are the cost implications? I read the article in the Personal Finance section of The Star (8 March) about the risks with living annuities where Tracy Jensen was quoted with reference to the impact costs have on the investment capital. What sort of cost levels could one expect to pay? My quarterly fee on capital of R2.4m is R5 063 (excluding VAT). Should you place my question on your web site, I would prefer to remain anonymous. I look forward to hearing from you.
Answer:
Yes, it is possible to transfer your living annuity.
You would have to check your T&Cs for cost implications (both for the fund you are leaving and the one you are joining); some funds charge initial admin and advice fees (which you obviously don't want to repeat). You must also avoid paying another broker charge. Some funds don't charge any such fees (eg 10X, once our living annuity is up and running, within the next few months).
Your quarterly fee of R5 063 on R2,4m of capital implies an annual rate of around 0,84% plus VAT, which is acceptable, provided this fee (absolute amount) will decline proportionally to your capital, and there are no other fees that you have overlooked, or are not aware of.
