Preserving Your Retirement Savings Is Now Easier

The Woolworths Group Retirement Fund has a default investment strategy in place and the trustees of the Fund are satisfied that this strategy remains appropriate.

Default preservation means that when you leave your employer due to resignation, retrenchment or dismissal, you have the option to leave your money in the Fund. This option has been available since June 2018.

When you leave your employer, these are the options available to you:

• Leave your money in the Fund (use the Fund as a preservation fund).
• Take all your cash.
• Move your money to a preservation fund.
• Move your money to a retirement annuity.
• Move your money to your new employer’s fund.

So, why is it a good idea to leave your money in the Fund?

• Preserving your money is in your best interest and will improve your retirement benefit.
• It is easy and convenient.
• There are lower costs to you as the fees are at institutional rates and significantly cheaper than retail rates with other preservation options.
• You remain in the same investment strategy with which you are already familiar instead of having to understand a new, complicated strategy.
• Getting financial advice is not compulsory.
• No minimum amounts are required.

What if you have a housing loan?

If you have a housing loan that is secured by your benefit in the Fund, then please note that when you leave your employer, the housing loan will have to be settled, regardless of which of the options you choose.

This means that even if you choose to leave your money in the Fund, the home loan will have to be settled and the balance will be preserved in the Fund for you. Please also note that the home loan settlement will be subject to tax.

When you retire, you will either require an income immediately or you will not.

You would need to purchase a pension, which could either be:

• a life annuity (guaranteed pension), or
• a living annuity.

A life annuity protects you and your spouse for life. It operates like an insurance policy. The increases are determined by the type of annuity you buy. This decision will depend on your requirements and the amount of capital you have.

A living annuity is a flexible pension that allows you to draw a pension between 2.5 and 17.5% each year. It operates like a unit trust and does not have any insurance or guarantees. You will need to manage your living expenses to ensure that you have enough money until you and your spouse pass away.

Your trustees have chosen an out-of-fund default living annuity, namely the Alexander Forbes Retirement Income Solutions (AFRIS) Living Annuity. This solution combines the benefits of a living annuity and a life annuity by:

• allowing you the flexibility of pension income
• leaving a legacy for your loved ones
• providing you with a guaranteed income.

The major advantage of this option is the reduced cost at which it is priced. This is because it is priced for ‘institutional’ investors (such as large retirement funds) and not for retail (individual) investors.

PLEASE NOTE: Even though AFRIS is the Fund’s default annuity strategy, you are not obliged to select this option and may select any annuity of your choice following consultation with your financial adviser.

But want your money to stay invested, you can defer taking your retirement benefit and leave your money invested in the Fund.

• You will continue earning investment returns on your money in the Fund.
• You will no longer contribute to the Fund.
• You will not qualify for any of the insured benefits such as death, disability and funeral benefits.
• You will still pay investment fees and costs, but they will be lower than if you were to invest the money yourself outside of the Fund.

REMEMBER: Always consult your financial adviser before making any important financial decisions.