Retirement annuity

[kavesh]

Hi all

Would appreciate any advice from anyone that is in the insurance industry.

So I took out an RA with Sanlam many years ago. In the days I was none the wiser regarding fees and how the insurance companies tie you in forever.

Anyways I now understand fees and the impact it has on your investments. The product I was sold comes with a lovely price tag of >3% in fees.

I was considering transferring the fund value to a low cost provider like 10X or similar but there is a penalty that Sanlam will charge of around 6% of the fund value. Seems they have not raped me enough!

I contacted a broker and asked for advice and he suggested that rather switch to Sanlams new product called the Cumulus Echo RA which gives you a bonus allocation over and above your investment.

I did some google reviews on the product which was done in 2017 and seems this may not be a good RA vehicle.

https://www.thefinancialcoach.co.za/2017/04/24/sanlam-cumulus-echo-ra/#page-content

https://www.news24.com/citypress/per...viser-20161019

The second article suggests that if you had the product for 10 years there should not be any penalty to transfer out, if I read it correctly.

Would appreciate comments, thanks

[AmithS]

Hi Kavesh,

Maybe ask Sanlam if the penalty falls away after 10 years.

Another option is to stop your monthly premiums to Sanlam and start a new RA with another provider.

I stopped my monthly premiums with an RA about a year ago, I still have the funds in my RA with the provider - just dont make monthly payments to them anymore. This "cancellation" so to say was done by my broker...

NB: I am not a financial advisor...

[kavesh]

Hi Kavesh,

Maybe ask Sanlam if the penalty falls away after 10 years.

Another option is to stop your monthly premiums to Sanlam and start a new RA with another provider.

I stopped my monthly premiums with an RA about a year ago, I still have the funds in my RA with the provider - just dont make monthly payments to them anymore. This "cancellation" so to say was done by my broker...

NB: I am not a financial advisor...

Thanks for the reply Amith.

I have already asked the question and was told by the broker that if I stop contributing the penalty is the same as though I transferred out.

MY statement from Sanlam has the transfer value which is 6% lower than the value of the fund. It theft if you ask me! I can understand if the policy was new, but this is almost 2 decades old.

I have been researching and it seems that all the insurance companies do this. Besides the high fees we pay they take more of you want to stop contributing or transfer out.

[Dave A]

How far away is the RA from maturity?

[AmithS]

Thanks for the reply Amith.

I have already asked the question and was told by the broker that if I stop contributing the penalty is the same as though I transferred out.

MY statement from Sanlam has the transfer value which is 6% lower than the value of the fund. It theft if you ask me! I can understand if the policy was new, but this is almost 2 decades old.

I have been researching and it seems that all the insurance companies do this. Besides the high fees we pay they take more of you want to stop contributing or transfer out.

Found this if it helps,

Can I stop contributing to my RA?
In respect of a unit trust RA, you can stop contributing to your investment at any time without any fees or penalties. As there is no recoupment period as in the case of insurance RAs, you will not be penalised for stopping or starting your contributions. If you are within the initial 60-month recoupment period of an insurance RA, the insurance company may charge you a penalty for stopping your premiums and making your policy paid-up.

Source: https://www.moneyweb.co.za/financial...ked-questions/

[kavesh]

How far away is the RA from maturity?

6 years to go. My issue with it is the high fees:-(