Advantages of a retirement annuity

1. Transferring a retirement fund into a retirement annuity is tax-free.

2. Your money is invested and will grow, depending on how it is invested, until your retirement. You also have several investment options.

3. Pay a set amount every month until retirement - just as with a retirement fund. What you put in extra, is tax-deductible up to a point. Use it to increase your tax-free return at retirement.

4.If you die before you retire, your money will not form part of your estate but will be allocated to your dependents by the trustees of the fund in terms of Section 37C of the Pension Funds Act.

5. If you get into debt or become bankrupt your fund will be left untouched.

6. You can take a lump sum of up to one third when you retire. You'll pay a lump sum tax rate and no capital gains tax.

7. The amount you save is only taxed on withdrawal.

Disadvantages of a retirement annuity

Subject to two extremely limited exceptions, you can only withdraw your money after a minimum retirement age of 55.

Weigh up your options and decide the best path for you by setting up a time to speak with an Old Mutual Financial Adviser.