Masters Degrees (Business Management)

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Browsing Masters Degrees (Business Management) by Subject "Annuities -- South Africa"

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    Comparing five annuity options offered at retirement in South Africa
    (Stellenbosch : Stellenbosch University, 2016-03) Bester, Tian; Krige, J. D.; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Business Management.
    ENGLISH ABSTRACT: South African citizens are faced with many financial decisions when they reach retirement. One such decision is which annuity to purchase with their pension capital. This study therefore analyses five different annuities available to the South African public in order to provide a better understanding of the value these products offer. The main focus of the analysis was the comparison of present values and ruin probabilities. The annuities examined were living and guaranteed annuities. Four different types of guaranteed annuities were analysed: level, 5% escalating, inflation-linked, and The Complete Picture Pension (TCPP) annuity offered by Sanlam. Eight retiree scenarios were considered with half of these scenarios focusing on spousal couples. An important conclusion to be drawn from the study is that living annuities are retirement products for those who can ‘afford’ it and who have sufficient financial knowledge. It is recommended that these products only be used as an additional source of income on top of a guaranteed annuity or some other form of income. This study also shows the significant value of guaranteed annuities when an increase in life expectancy is assumed. Furthermore, the industry should research new product structures such as the TCPP annuity, which is a relatively new product, and which shows promising results in this study. Finally, the study emphasises the subjectivity of the annuity decision as the results depend on the retiree(s) circumstances and needs to a large extent.