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Living Annuity
A Living Annuity is a flexible investment account from which you can draw a retirement income while your savings continue to grow.
It is often used by people entering retirement who wish to buy an annuity with the proceeds from their retirement fund.
How it works
You can open a Coronation Living Annuity by following our online Invest Now or downloading the PDF application form. During this process, you will be asked to provide certain details about the fund from which you are transferring and make a few selections and answer two important questions.
What level of annual income do you want to draw down?
- Living Annuity rules prescribe a range from 2.5%-17.5% of the investment value per year
- You can change your drawdown rate annually
- Income can be paid monthly, quarterly, bi-annually or annually
What underlying Coronation fund do you want to invest in?
- Coronation has two popular multi-asset funds but you are free to choose any Coronation rand-denominated fund
- You are free to switch between funds as your circumstances change
Your answers to these two important questions will have a material impact on whether your Living Annuity can sustain you throughout your retirement. We encourage investors to read more about the importance of choosing a sustainable drawdown rate and selecting a suitable fund in our Corolab Investment Guide (investing for income and growth) or to speak to a financial adviser.
Why a Coronation Living Annuity makes sense for you
A Coronation Living Annuity has several features that make them popular choices for retirees.
- They are market-linked, which means your initial investment is likely to grow over the medium to long term – sustaining your income needs for longer.
- You can choose a Coronation fund that meets your risk tolerance and investment preferences.
- You pay no tax on your invested funds (no income, dividend or capital gains tax). Any income withdrawn will be taxed according to your marginal income tax rate and based on your total income received.
- On death, the remaining value of your living annuity can be paid out to your nominated beneficiaries
- Coronation does not charge additional fees for managing a Living Annuity account. The only fees you pay are the management fees on the selected underlying Coronation fund(s).
Important: Investors in a Living Annuity cannot, by law, redeem the value of their Living Annuity. They can only draw down an income within the prescribed rate range (2.5% - 17.5% p.a.) until the value reaches R125,000 or below.
How to transfer from an existing fund
If you are eligible to retire from your existing fund (Pension, Provident, Preservation or Retirement Annuity), you will need to action/decide on the following as part of the transfer process:
Step 1:
Retire from your existing retirement fund
- If you are a member of an existing retirement fund, you will need to notify your fund in writing.
- Your retirement fund will offer retirement benefits counselling to inform you about your options, but it is also prudent to consult a financial adviser to help plan your retirement together.
Step 2:
Make some important decisions
- You need to decide whether you want to take all or some of the cash lump sum available upon retirement or use it to supplement your annuity income purchase.
- You will also need to decide on the level of income and underlying investment fund as detailed before.
Step 3:
Complete the paperwork
If you are a member of any Coronation retirement fund (Preservation Pension, Preservation Provident or Retirement Annuity) you will need to complete and submit the following forms:
If you are retiring from a non-Coronation retirement fund, you will need to complete your fund’s retirement instruction form along with the following:
What are the restrictions?
To benefit from tax savings in a Living Annuity there are few important restrictions.
Benefits
- Investors can choose their income level and underlying fund, change their income level annually, and switch between fund options as circumstances change
- Unused capital can be transferred to beneficiaries upon death and does not form part of the deceased’s estate
- No tax on interest or dividends earned, no capital gains tax on disposals
- No initial fees or admin fees
- You may convert your entire Living Annuity, or part of it, to a guaranteed (life) annuity
Restrictions
- You cannot redeem your Living annuity for balances above R125,000
- Minimum R100,000 lumpsum required
- Income is not guaranteed for life
- Investors need to choose an appropriate fund, ideally with the help of a financial adviser
- You cannot borrow against your Living Annuity
- You cannot cede your Living Annuity or offer it as security for debt
Funds
What are my investment options?
You can choose to invest in any of our rand-denominated unit trust funds. Your individual fund or combination of funds are not subject to any regulatory limits. To simplify the decision, we offer two funds that are optimised for the majority of investors in the first and second half of your retirement income journey.
Popular choice
Capital Plus
This fund is for retirees seeking steady, inflation-beating growth with lower volatility. It invests in a blend of shares, bonds, property, and cash — locally and offshore — to balance growth and capital protection. It’s a suitable Living Annuity fund choice, enabling long-term capital growth and a sustainable income.
- Aims for steady medium- to long-term growth with less volatility than typical balanced funds
- Diversified across shares, bonds, property, and cash, locally and offshore
- Regulation 28 compliant
Risk rating
Minimum investment term
3 years +
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Capital Plus
The fund is in the first instance managed to achieve reasonable investment growth over the medium to long term. Our intent is that the fund should produce an annualised return of at least inflation plus 4% over time. In addition, we aim to achieve less volatility than the average balanced fund. It is specifically managed to suit investors who want to draw an income over an extended period of time.
Investor profile
The fund is suitable for investors: Seeking a risk-conscious investment solution enabling an annual income drawdown over an extended period of time. Requiring a reasonable rate of real return over investment horizons of between 3 and 5 years, achieved at less volatility than that of the average balanced. When your objective is to accumulate capital over the long term, the fund is only suitable if a strong focus on managing downside risk and volatility is a priority. This fund can invest in a wide range of assets, such as shares, bonds, listed property and cash, both in South Africa and internationally, in a manner similar to that usually employed by retirement funds.
Benchmark
CPI + 4% p.a.
Risk rating
Minimum investment term
3 years +
Exposure to growth assets
Maximum: 75%
Annualised past performance (after fees)
| Returns | Fund | CPI | REAL RETURN |
|---|---|---|---|
| Since Launch (unannualised) | 1,302.5% | 267.8% | 1,034.7% |
| Since Launch (annualised) | 11.5% | 5.5% | 6.0% |
| Latest 20 years (annualised) | 10.1% | 5.4% | 4.6% |
| Latest 15 years (annualised) | 9.2% | 5.0% | 4.2% |
| Latest 10 years (annualised) | 8.6% | 4.8% | 3.8% |
| Latest 5 years (annualised) | 13.3% | 4.9% | 8.4% |
| Latest 3 years (annualised) | 17.2% | 4.1% | 13.1% |
| Latest 1 year | 18.8% | 3.1% | 15.7% |
| Year to date | 14.7% | 3.1% | 11.6% |
Balanced Defensive
This fund is for retirees who want steady growth and capital protection from a low-risk investment. It invests in a cautious mix of shares, bonds, property, and cash — locally and offshore — to smooth returns and limit large market swings. It’s a suitable Living Annuity fund choice, enabling defensive long-term growth and a sustainable income.
- Seeks to protect capital over any 12-month period
- Up to 50% in growth assets
- Regulation 28 compliant
Risk rating
Minimum investment term
3 years +
Try our investment calculator
Click here to see the returns of this fund if you had invested sooner
View fund performance
Invest in this fund
Balanced Defensive
The fund is in the first instance managed to protect capital over any twelve-month period. In addition, we aim to achieve reasonable investment growth over the long run. It is specifically managed to suit very cautious investors who want to draw an income over an extended period of time.
Investor profile
The fund is suitable for investors: Seeking a defensive investment solution enabling an annual income drawdown. Requiring a reasonable rate of return over investment horizons of 3 years and longer. With a low tolerance for the volatility of returns associated with equity investing. This fund is not suitable for investors seeking to aggressively accumulate capital over an extended period of time.
Benchmark
CPI + 3% p.a
Risk rating
Minimum investment term
3 years +
Exposure to growth assets
Maximum: 50%
Annualised past performance (after fees)
| Returns | Fund | CPI | REAL RETURN |
|---|---|---|---|
| Since Launch (unannualised) | 445.0% | 171.5% | 273.5% |
| Since Launch (annualised) | 9.6% | 5.5% | 4.0% |
| Latest 15 years (annualised) | 9.5% | 5.0% | 4.4% |
| Latest 10 years (annualised) | 8.5% | 4.8% | 3.7% |
| Latest 5 years (annualised) | 11.3% | 4.9% | 6.4% |
| Latest 3 years (annualised) | 14.6% | 4.1% | 10.5% |
| Latest 1 year | 15.7% | 3.1% | 12.6% |
| Year to date | 11.9% | 3.1% | 8.8% |
Popular funds
See all popular Coronation fund options for a Living Annuity.
Invest Now
Experienced investors or those who prefer to build a custom portfolio can use our Invest Now process designed to meet every need.
Investment quote
Create a summary of your prospective investment. This is a useful document for comparisons prior to investing.
Our insights
Frequently asked questions
Coronation does not charge initial, account or transaction fees on its Living Annuity. Your full investment goes into buying units in your chosen fund(s).
Each fund has an annual management fee, which covers professional investment management and administration. All fees are fully disclosed on each fund’s fact sheet and on our website.
If you have a financial adviser and agree to a fee with them, we can deduct it from your account and pay it directly to your adviser.
You cannot make lump sum withdrawals from your Living Annuity whenever you choose. Instead, you receive regular retirement income payments (your retirement income).
The only time you can take out the remaining balance as a lump sum is if your Living Annuity’s total value falls below R125,000. This is called a commutation, and the amount is paid to you in cash.
No, you may not cede your investment in the Coronation Living Annuity, nor use it as security for debt.
No, you may not borrow from your Coronation Living Annuity.
While invested
No tax is applied to growth inside the annuity.
When you draw an income
Your withdrawals are taxed as income, at your applicable tax rate. An annual tax certificate will be issued and can be downloaded from Coronation Online Services.
The value of your Living Annuity will be paid to the beneficiaries you nominate. They can choose to take the benefit as a cash lump sum (subject to tax) or to receive an income through an annuity.
Yes, you may transfer from another living annuity provider to Coronation or select to transfer your Coronation Living Annuity to another registered living annuity, at no cost, upon request.