MyMoney Online

What happens to your Retirement Annuity if your fund manager goes bust?

(Also read "10 reasons why this is BY FAR the best way to save for retirement".)

Retirement annuities are, without a doubt, the very best way to save for retirement. They are, however, extremely long-term investments.

You might, as a 25-year-old, take one out in 2015 from, for example, Coronation. Who is to say that Coronation (or Citadel, or whatever asset manager you chose) will be around in the year 2045, the earliest possible date you’re allowed to cash out?

A lot of things can happen in 30 years; what happens to your retirement kitty if they go bust?

Nothing. That’s what. You’re investments are safe. Here’s why…

Your Retirement Annuity is merely a “wrapper” containing various investments. The fund manager manages this “wrapper”.

You are not investing in Liberty (or Allan Gray, or any other fund manager) if you take out a Retirement Annuity with them. Your investments are in the companies the fund manager chose to invest in on your behalf. In other words, you’re investing in Naspers, SABMiller, MTN, etc. You are not investing in Liberty, Citadel, Nedgroup Investments, etc.

Because you’re not investing in the fund manager (you’re simply paying them to manage your investments) it really doesn’t matter all that much if they go under. Another one will simply take over the funds under their management.

Legislation to protect your Retirement Annuity

Companies that manage funds on behalf of investors must be licenced by the Financial Services Board.

Regulations forbid fund managers to hold investors’ funds on their balance sheets. Your funds are therefore safe no matter the financial state of the company you chose to manage your Retirement Annuity.

The Financial Services Board ensures the enforcement of the “The Collective Investment Schemes Act” which compels fund managers to make use of a separate trust with independent trustees and auditors.

Your Retirement Annuity will not be affected if your fund manager goes bankrupt and the manager’s creditors will have no claim against your investment.

(Also read "10 reasons why this is BY FAR the best way to save for retirement".)


This article first appeared on 702 : What happens to your Retirement Annuity if your fund manager goes bust?


Recommended

by NEWSROOM AI

CapeTalk welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the CapeTalk community a safe and welcoming space for all.

CapeTalk reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

CapeTalk is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
Don’t earn much? How to best invest tiny amounts...

Don’t earn much? How to best invest tiny amounts...

Earn peanuts, but want to start investing? You can now buy even tiny fractions of a share at a time. And it's very simple!

How to talk to your kids about money

How to talk to your kids about money

What does your behaviour teach them? The Money Show’s Bruce Whitfield interviews Certified Financial Planner Kim Potgieter.

How to ensure the best possible retirement your money can buy

How to ensure the best possible retirement your money can buy

We talk to the author of “Retiremeant: Get The Most Meaning from Your Money”, a book on living the best possible life after work.

5 things you must do now if you plan on retiring in roughly 10 years

5 things you must do now if you plan on retiring in roughly 10 years

Warren Ingram, Financial Advisor at Galileo Capital, has these tips for anyone wishing to retire a decade or so from now.

10 reasons why this is BY FAR the best way to save for retirement

10 reasons why this is BY FAR the best way to save for retirement

Is there a single best way to build your wealth so you can retire with dignity? Yes, there is, despite costs and limitations.

How much you should save for retirement

How much you should save for retirement

You know you should save for retirement, but do you know how much? Financial planner Claude Hannah breaks it down in simple terms.

Popular articles
Here's how to check your load shedding schedule in Cape Town

Here's how to check your load shedding schedule in Cape Town

Stage 1 load s​hedding has been declared nationally. The City of Cape Town has urged residents to take note of the schedules.

Man who dumped body of family dog in street demoted at top JHB law firm

Man who dumped body of family dog in street demoted at top JHB law firm

Media law guru Emma Sadleir warns employees online that there are many potential events that could bring a company into disrepute.

SPARK Schools provides Singapore-quality education for R19 400 per year

SPARK Schools provides Singapore-quality education for R19 400 per year

Our education system is poor, leading to a proliferation of private schools, most which are unaffordable even for the middleclass.

Get ready for another round of load shedding as Eskom workers shut down power

Get ready for another round of load shedding as Eskom workers shut down power

Eskom spokesperson Khulu Phasiwe says the power utility has instructed municipalities to implement stage one load shedding.

[WATCH] SPCA lays animal cruelty charges following violent attack on seal pup

[WATCH] SPCA lays animal cruelty charges following violent attack on seal pup

Video footage emerged on Facebook showing two fishermen brutally kicking and stabbing the animal.

[LISTEN] Wife of Siya Kolisi 'so proud' as husband Siya leads SA to victory

[LISTEN] Wife of Siya Kolisi 'so proud' as husband Siya leads SA to victory

The Springboks won a Test game against England on Saturday under the captaincy of Siya Kolisi.

UPDATE: Joburg man who dumped dead dog claims there were no vets nearby - SPCA

UPDATE: Joburg man who dumped dead dog claims there were no vets nearby - SPCA

The man has told the Sandton SPCA that he could not locate a nearby veterinary clinic in order to dispose of the dog's carcass.

Eusebius: 'Needing to know what happened before the Supersport video is BS'

Eusebius: 'Needing to know what happened before the Supersport video is BS'

Callers on The Eusebius McKaiser Show stand behind Ashwin Willemse who walked off the Supersport Rugby set on Saturday.