Many people have small old fixed interest annuities with low balances & income. Liberty have a page showing that this can be done? Other companies do not know?
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
We can only comment on the income tax implications and not on whether or not the particular ‘fixed interest annuity’ is a retirement interest or a living annuity. It is not only because you have not provided the information required to do so, but it is a question best asked to the fund where these annuities are at the moment.
The current wording, in all the definitions of a pension, retirement annuity fund or preservation fund (but excluding provident funds) in the Income Tax Act, reads as follows:
Provided that in respect of any fund … the rules of the fund provide … that not more than one-third of the total value of the retirement interest may be commuted for a single payment, and that the remainder must be paid in the form of an annuity (including a living annuity) except where two-thirds of the total value does not exceed R165 000 or where the employee is deceased…”
The amount of R165 000, which applies from 1 March 2016 and is R50 000 at the moment, was originally brought in to allow the member to take the full amount when the retirement interest falls below the R75 000 (or R247 500). The logic was that the cost, to the fund, of managing the interest, may exceed the return.
We suggest that the fund itself is contacted to determine if it is a retirement interest.