Question:
Please clarify the current rules for commuting small ILLA pensions. I have one small ILLA through Investec Asset Management, which has a capital balance of about R30 000, but the admin fees are beginning to get out of proportion as the value diminishes (it is in a money market fund). My main pension is through OM and has a capital value of over R2 million. Can I commute the small one or does it depend on the value of all my pension arrangements?
Answer:
Phil, In such matters SARS normally applies the aggregation principle (considers all policies together), to prevent the public circumventing provisions of the Income Tax Act by holding multiple products. But it appears that you are duplicating admin fees, so you should consider joining the two ILLAs.
