Company Announcement - One of South Africa’s best kept secrets is a Private Retirement Annuity Fund called The Combined Retirement Annuity Fund. It was incorporated over 50 years ago in 1961 by a handful of astute chartered accountants who realised that their only avenue of providing for retirement was the purchase of retirement annuities. At the time, the insurers were selling these products to accountants in their thousands, when in fact the accountants, and other professionals, merely wanted to buy them.
The selling of the annuity policies triggered mouth-watering commissions for the agents whose presence around the accounting firms in February could be likened to lions slouching around a lonesome water hole for days on end, waiting for thirst-craved prey to arrive and drink. Of course, initial premiums were hammered by the concomitant commissions payable to the agents with the result that for many years one had less skin in the game than one had contributed for the first few years’ premiums. This has and had a detrimental effect on returns and it is one of the reasons why returns on policies in the public domain remain inferior and pedestrian to this day, compared to those of this Fund. One of the advantages of the Fund is its flexibility. Contributions can be varied and determined year by year. So, for example, tax resulting from windfall bonuses or the exercising of share options can be cushioned by these voluntary contributions into the Fund. There are many members who do not contribute at all in some years.
The Combined Retirement Annuity Fund charges minimal fees as the Trustees receive no remuneration. FSB regulatory interference has had the effect of increasing costs and increased the interface with officialdom. The ratio of expenses to the Value of the Fund is consistently less than 0.11% p.a. The Fund is FSB approved and the investment of funds is typically regulated by Section 28 with no more than 75% of assets under management being invested in equities. The compound annual return since 1976 has averaged 17.67% p.a. The Fund is also exposed to off-shore investments.
There are fewer than 800 members, mostly professionals, and the Fund has assets under administration of close to R1 billion. Annual contributions have been in the region of R35 million. Trustees, who are obliged to be members of the Fund, come from various backgrounds and industries and it is they who carry on the legacy of those who founded it.
For further information please contact
Cedar Employee Benefits (Pty) Ltd
11 Park Lane Entrance 15 Junction Avenue, Parktown, 2193
P O Box 2140, Houghton, 2041
Switchboard: 011 547 8600
Direct: 011 547 8645
Fax: 086 673 6832
E-mail: sharon@cedar.co.za