Anc liquidating trust

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In 2014, Allan Gray tested Bengen’s theory using portfolios with at least 55 percent in South African equities and the rest in local bonds over 84 different 30-year periods.Sticking to the rule resulted in the capital being able to sustain the drawdown in 93 percent of the cases, and Allan Gray declared it a good rule for South African living annuity investors.And they’re right.” In 2012, South African actuaries Mayur Lodhia and Johann Swanepoel, then both at Momentum Employee Benefits, published a paper showing that if retirees took into account that they were paying a premium to get the assurance that their income would be secure for life, they found that guaranteed annuities provided better value than living annuities.

This article was first published in the second quarter 2017 edition of Personal Finance magazine.South Africans have a deep mistrust of handing over their capital to a life assurer in return for a guaranteed income, but it is also true that the income a guaranteed annuity can provide is often too low and that these annuities do not offer the option of leaving a legacy to your children, unless you buy expensive life cover.Investment-linked living annuities allow you to select an annual income drawdown of between 2.5 percent and 17.5 percent of your capital each year. Once you reach the 17.5-percent ceiling, you may not increase your income each year to match inflation, and your real (after-inflation) income will decline.Should we be using a different language when we talk about living off our savings?The conversation in South Africa is slowly becoming more informed, but many of the large financial product providers used by retirees to provide pensions have contributed little to the debate.

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