FAQ's on Retirement by Young Professionals

Ruvan J Grobler • March 19, 2025
  • Is retirement an out-of-date pipedream?


With rising living costs and economic uncertainty in South Africa, it’s not surprising that people feel this way. But what we see as “retirement” is changing, the traditional retirement age of 65 has already started to look different because people live longer. We live in a time where passive income and part-time work is as easy as ever and done from anywhere. Although retirement is continually evolving it still is more important than ever to start investing as early as possible and stay consistent over the long-term.


  • Employer matching your pension contributions, should you max it out?


Yes definitely. It’s free investment allocations and effectively instantly doubles your contributions. The higher the contributions, the better the compounding effect of the capital. You can also deduct your employer’s contributions together with your own contributions in your annual income tax returns.


  • Are there other ways to supplement your retirement income?


There are many discretionary investment structures (non-retirement) that hold massive tax-and estate planning benefits. It's always a good idea to diversify in the structures that you use to invest because they can be so different. This is true for the actual assets as well, never have your eggs in one basket. Building a business or renting out property can also be effective but holds it’s own risks.


  • Should you pick the most aggressive investment option for retirement?


If you have time on your side, going more aggressive is the optimal long-term strategy if you can stomach short-term volatility in assets like shares. In South Africa, all pre-retirement structures must adhere to Regulation 28 of the Pension Funds Act and this does limit the level of risk you are able to take with your retirement funds, but alternative structures can supplement your risk appetite. Time in the market is always better than trying to time the market.


  • What are common retirement investment mistakes?


  1. Starting too late.
  2. Not saving enough, at least 20% of your monthly income should be invested.
  3. Regularly switching between different funds and assets due to short-term volatility (bad investor behaviour).
  4. A lack of diversification.
  5. Failing to adjust your plan as you go – marriage, kids and inflation play a role.


Ruvan J Grobler RFP™

SA Trusts can now distribute to offshore trusts

By PJ Botha • September 4, 2025
For a long time, the South African Reserve Bank (SARB) prohibited money from being transferred directly from local trusts to offshore trusts. You may have had offshore exposure in your local trust through asset swops and other investment vehicles, but if you want to distribute to overseas beneficiaries, you must first withdraw funds from the trust and then transfer to them through the SARB. This recently changed. SARS declared that beginning August 1, 2023, it will evaluate and possibly approve petitions to transfer funds from South African trusts to offshore trusts. This adjustment coincides with the South African Reserve Bank's (SARB) recent relaxation of several currency control regulations. While this new alternative provides numerous prospects, there are tight criteria and a thorough application process. If you are an investor or trustee, you must understand these requirements. There is certainly no one-size-fits-all answer, and the drawbacks and benefits should be examined while deciding. Drawbacks: 1. Complex Regulatory Requirements. • Strict compliance required: The procedure is extensive, necessitating meticulous documentation and adherence to both SARS and SARB regulations. • Long approval process: Each application is assessed individually, which can take weeks or even months. 2. Cost • Legal, tax, and accounting assistance can be costly. • Administrative burden: Extensive documentation and regular reporting increase management time and expenses. 3. Tax obligations • The South African trust must pay all relevant taxes (capital gains, dividends, etc.) before distribution, preventing tax deferral to the recipient. Money held in a trust is often taxed at a higher rate than money held in the name of a company or individual. 4. Uncertainty and Evolving Practice • New regulations may impact future distributions and compliance needs. • Disputes: Failure to meet SARS or SARB rules may result in delayed or refused distributions. Benefits: 1. Global Wealth Diversification. Offshore trusts may provide superior asset protection during political or economic volatility in South Africa. 2. Succession and Estate Planning • Multi-Jurisdictional Estate Planning: This allows families with members living in different countries to structure their affairs more efficiently. • Offshore trusts facilitate the transfer of money to beneficiaries outside South Africa, simplifying inheritance processes. 3. Tax preparation • Offshore trusts can optimise worldwide tax positions with proper preparation and professional counsel, but must follow all applicable requirements. 4. Regulatory Clarity • Official Approval: SARS and SARB now provide clear protocols for trustees and investors, eliminating legal risks. The ability to transfer money from a South African trust to an offshore trust is a useful tool for global estate and investment planning. Professional guidance is essential to maximise benefits and avoid pitfalls.

AFGETREDENES EN MEDIESE KOSTES

By Riaan Botha • September 4, 2025
’n Nuwe denke oor ouderdom. ‘n Positiewe benadering oor verouderdom word gevorm as gevolg van die ontwikkeling van tegnologie en die mediese wetenskap. Statistieke wys dat die mens langer neem om te verouder en op ’n hoër ouderdom afsterf. Met veroudering word nuwe perspektiewe oor verhoudings met familie en vriende gevorm. ’n Groter dringendheid bestaan om beplanning uit te voer. Daar is ’n besef dat die tyd aanstap en dat elke oomblik geniet moet word. Die gewoonte om uit te stel en eers later belangrike momente in jou lewe te wil ervaar, verander. Daar is ’n besef dat die liggaam verouder maar dat die innerlike self steeds wil vernuwe. Laasgenoemde kan aangehelp word deur positiewe denke en gewoontes soos om terug te gee aan die plaaslike gemeenskap, om kennis te deel deur om te skryf of om onderrig te gee. Daar kan selfs oorweeg word om ’n nuwe vaardigheid aan te leer. Een van ons kliente wat ’n afgetrede predikant is, het na aftrede begin om klavierlesse te neem terwyl ander persone ’n nuwe plaaslike taal aangeleer het. Mediese kostes  Volgens Stats SA se verslag “Profile of older persons in SA” wat in 2023 gepubliseer is, het die gedeelte van die SA bevolking wat ouer as 60 jaar is, verhoog van 7,0% in 1996 tot 9,8% in 2022. Wanneer die bevolking per groep ontleed word, maak die 60 jaar en ouer gedeelte van die betrokke groep die volgende uit: Blankes ongeveer 29%, Indiërs/Asiate 16,5%, Kleurlinge 10,9% en Swartes 7,8%. Hiervan gebruik ongeveer 50% kroniese medisyne, 20% gebruik brille, 10% dra gehoortoestelle en 5% is in rolstoele.Hierdie ondersteunende toestelle is duur en word nie altyd ten volle deur mediese fondse betaal nie. Die verslag noem ook dat meer as 50% van persone ouer as 60 leef in huishoudings wat uitgebreide families huisves. Mediese uitgawes is seker een van die belangrikste items in ’n afgetredene se begroting. Dit is ’n ongelukkige verskynsel dat mediese kostes met ouderdom verhoog. Die koste van ’n mediese fonds verhoog jaarliks met 3% tot 5% meer as die inflasiekoers en sal ’n al groter persentasie van ons persoonlike uitgawes vereis. Om die regte mediese fonds volgens persoonlike mediese kondisies te kies, speel ’n belangrike rol om deurlopende mediese uitgawes te beperk. Gap Cover kan ’n belangrike rol speel wanneer mediese fondsvoordele nie al die werklike mediese uitgawes dek nie. ’n Versekeringsproduk wat sal uitbetaal wanneer een van die gevreesde siekte opgedoen word, kan ook help om onverwagte mediese uitgawes te dek. RIAAN BOTHA