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[LISTEN] Understanding how pension plans work

9 May 2021 2:34 PM
Tags:
Personal finance
pension fund
Living annuity
life annuity
pension plans

Certified financial planner Paul Roelofse explains the difference between a living annuity and a life annuity.

Certified financial planner Paul Roelofse says it is important to understand what benefits come with different pension plans.

Speaking to Refiloe Mpakanyane, Roelofse says there is a huge difference between the life annuity and the living annuity.

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With life annuity what you do is you hand over your retirement capital to this particular company and it goes into a risk pool and they work out your life expectancy and offer you a pension based on that.

Paul Roelofse, Certified Financial Planner

If you invest with that company, you get that amount for the rest of your life and it is quite a useful way of providing a pension because you get this certainty that creeps into your financial planning. But the one downside of it from my point of view, should you die sooner than they expect you to die, you simply hand over your pension back to them.

Paul Roelofse, Certified Financial Planner

Roelofse explains how the living annuity works.

This is where you take custody of your pension and say I am going to invest it and I am then going to place it with a product provider. You have the responsibility to make sure the pension lasts you for the rest of your life.

Paul Roelofse, Certified Financial Planner

The whole idea here is to understand where am I invested and am I keeping pace with the pension that I need every year.

Paul Roelofse, Certified Financial Planner

Listen to the full interview below...




9 May 2021 2:34 PM
Tags:
Personal finance
pension fund
Living annuity
life annuity
pension plans

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