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Temporary Relief Measures with Respect to Living Annuities

18 June 2020

If you are invested in one or more living annuities on the Glacier platform, it is important that you are aware of the relief measures that National Treasury has promulgated.

These relief measures are aimed at assisting clients through the COVID-19 pandemic and it allows you to make a change to the income you currently receive from your living annuity. These relief measures are for the period 1 June 2020 until 30 September 2020 (with the expiry date subject to change by National Treasury).

Read more about the relief measures published on 1 June 2020 in the Government Gazette.

What do the Relief Measures Entail?

Individuals who receive income from a living annuity will be allowed to immediately:

  • Increase their annual income level to a maximum of 20%, or
  • Decrease their annual income level to a minimum of 0.5%.

The income change can be made any time between now and 30 September 2020, and you will not have to wait until your next income revision date – even if you’ve already revised your income this year.

Guidelines for the Relief Measures

  • Should you want to make use of these relief measures during the period 1 June to 30 September 2020, please send us a signed instruction as soon as possible.
  • Glacier requires 9 days’ notice to effect an income change.
  • The requested change will be applied from your next income payment date and cannot be backdated.
  • The calculation of the amended income will be based on the value of the investment at either the last anniversary date or the inception date of the policy - whichever is more recent. It will not be calculated on the current value of the investment.
  • At the end of the relief period, the income drawdown will automatically revert to the gross income that was in force at 31 May 2020.
  • If your annual income revision date falls within the relief period, we will send you the regular income revision letter, and require you to send us your usual annual income revision instruction. Following the relief period, the income will continue as indicated on the annual income revision instruction.
  • The standard rules for income frequency payments continue to apply, and you can only receive 12 incomes in any income year (which stretches from one income revision to the next).

Tax Implications

Tax is calculated using the gross income amount for the current tax year. Increasing or decreasing your income during the relief period will result in a recalculation of your projected income and therefore your income tax for the tax year. Once the income is amended again at expiry of the relief period, the income tax will be recalculated again and revised to align it with the actual income you will receive during the current tax year.

In this regard it is important to note the following:

  • increasing your income for the relief period may result in a significant increase in income tax;
  • decreasing your income during the relief period may result in the income tax initially decreasing; and
  • increasing again when the relief period ends, and your income reverts to a higher amount.

We will accept instructions in any of the following ways:

  • a signed Special Revision of Income form;
  • a signed instruction, which may be handwritten;
  • an instruction emailed directly from your email address (please note that this must be the email address that we have on record for you);
  • an instruction from an appropriately authorised financial intermediary.

Permanent Commutation Relief for Annuities

A permanent amendment has been made to the commutation threshold for annuities. The threshold has been raised to R125 000 (previously R50 000 and R75 000), irrespective of whether you’ve made a withdrawal at retirement. This means that you can request to fully withdraw your living annuity if the value is less than R125 000. This amendment is permanent, and not related to the temporary income relief period.

We trust that you will find the relief period helpful during these challenging times. We strongly urge you to consult with a suitably qualified financial intermediary before changing your income, to ensure you are fully informed about the long-term impact of making such a change and the possible tax implications. Should you want an introduction to a financial intermediary, you are welcome to contact us and we will arrange for an intermediary in your area to contact you.

We’re Here to Help

Feel free to contact the Glacier Communication Centre if you require any further information.

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