Which platform offers a living annuity that can be optimised for offshore exposure?

Unfortunately, many of the larger investment platforms have reached their offshore asset capacity on their life licences.

I am looking to invest my retirement annuity into a living annuity. I am already drawing a guaranteed pension. I would like to optimise the offshore exposure with the living annuity. Please advise on suitable investment platforms that can be considered for a living annuity investment that optimises offshore exposure.

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There are several factors you may want to consider.

Aspects such as price, product offering, and investor protection tend to be fairly competitive and standardised among the larger platform providers. The factors that typically differentiate one platform from the next is the quality of service and the use of fintech. Service perhaps being the most important of the two. 

Exchange control restrictions on investment platforms

Thankfully living annuities do not have to comply with Regulation 28 of the Pension Fund Act which imposes restrictions in terms of how much one can invest in direct offshore assets.

Unfortunately, many of the larger investment platforms have reached their offshore asset capacity on their life licences which impacts investment vehicles such as living annuities, endowments, and tax-free savings.

Simply put, although living annuities are not subject to offshore restrictions, several platforms have had to limit the offshore exposure in these investment vehicles due to their own exchange control limits.

The table below shows the current offshore limits for the various platform providers under their life licences.

Investment platform Current offshore limit (living annuities, endowments, tax-free savings investments) Source
Allan Gray 40% Practice Note 365
Ninety One 40% Practice Note 309
Glacier No restrictions Advised by a call centre representative (14/12/2021)
Momentum* 75% According to Momentum (25/01/2022)
Old Mutual Still awaiting a reply

There is no central database that one can easily access to view which platforms are implementing limits on offshore assets and, where applicable, what those limits are.

The exercise of contacting the various platforms to clarify the above highlighted the ‘service’ factor that one should consider when selecting a platform. Needless to say, some platforms consistently disappoint in their service levels to both financial advisors and investors.

The offshore restrictions at a platform level are likely to be relaxed at some point in the future. One option is to utilise the Glacier platform which, according to the call centre, has no offshore limits within their living annuities. Alternatively, you may want to consider maximising your allowable offshore exposure in one of the above platforms and wait for the restrictions to be relaxed, at which point you can up-weight your offshore exposure. Lastly, you can consider exploring smaller platform providers that have no offshore asset restrictions.

Based on the fact that you have a guaranteed annuity, I agree that it is worth considering exploiting a higher offshore exposure through your living annuity in order to hedge out some risk particularly if your guaranteed annuity is issued by the government.

With regards to sustainable withdrawal rates in retirement, I would encourage you to watch Allan Gray’s presentation on How to manage your living annuity in uncertain times.

*This figure was originally mistakenly listed here as 40%

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