By Waldette Stoffberg, 21 August 2019
People are living longer and it is crucial that they take into account their health and personal circumstances to ensure the solution they select will provide a sustainable income for the rest of their lives. Ensuring a sustainable retirement income was behind National Treasury’s introduction of the Default Regulations to the Pension Funds Act, which became effective on 1 March 2019.
Essentially, the following was introduced:
In many instances, the default option may appear to be the easiest and most cost-effective option. But consideration needs to be given to the client’s circumstances as well as the benefits and choices offered by each of the different solutions.
Glacier offers a range of retirement income solutions to cater for different needs. Some clients may still need to grow their capital aggressively into retirement, whereas others may be seeking more certainty and a guaranteed income to last throughout their retirement. Glacier’s offering includes the Investment-Linked Living Annuity and the Investment-Linked Lifetime Income Plan, as well as the Sanlam Life Annuity – or even a combination of these. Glacier’s Retirement Income Planner web-based tool lets intermediaries compare these retirement income solutions, or combinations thereof, and view income in both real and nominal terms – customised to a specific risk profile.
At Glacier we encourage all clients to seek advice from a qualified financial intermediary, before making any decisions. Findings from the latest Sanlam BENCHMARK Survey show a 20% improvement in preservation rates for fund members who received counselling, compared with those who did not.
The need for financial advice becomes even more pertinent as the complexity of a member’s estate and financial planning needs increases. When selecting an income solution, considerations should include a person’s expected longevity, level of savings, medical needs, whether their spouse needs an income and whether they still require a high level of capital growth. In many instances, combining different solutions provides the best outcome, with the guaranteed portion covering living expenses, and the market-linked portion providing growth and a potential legacy.
Some of the reasons clients may benefit from selecting an Investment-Linked Living Annuity (ILLA) include the following:
Clients in Glacier’s ILLA have peace of mind knowing the policy is underwritten by Sanlam Life Insurance Limited and forms part of the Sanlam balance sheet. Glacier is appointed by Sanlam as the administrator for the living annuity and the assets are therefore owned and monitored by Sanlam Life.
Glacier allows clients to combine various retirement income options. This often provides the optimum solution in terms of guaranteeing a monthly income that covers basic living needs, and a growth portion to facilitate capital growth.