A Living annuity is a financial product that pays you a regular income. You can choose between two types of annuities a Guaranteed Annuity or a Living Annuity. As member of a pension, pension preservation or RA fund, you must use at least two-thirds of your fund proceeds AT RETIREMENT to purchase an annuity, once your fund value is more than R247 500. You are not permitted to buy a fixed-term annuity that only pays out for a specific number of years.
Taking out a Guaranteed Annuity places the risk of the capital invested with the insurer, giving you peace of mind that the capital will be protected whilst ensuring a monthly income throughout your retirement.
Taking out a Living Annuity, you are in control of the fund choices and the monthly income earned, (choice between 2.5% and 17.5%) thus you take on the risk of how your capital is managed.