Frequently asked questions

A unit trust is a type of investment that provides easy and affordable access to financial markets. Your money is combined with the money of other investors and our investment managers use the pool of money to buy underlying investments, such as equities, bonds, cash and property, depending on the unit trust objective. The unit trust is split into equal portions called 'units' that are allocated to you according to the amount of money you invest and the price of the units on the day you buy them.

Unit trusts are beneficial as you buy units in the unit trust of your choice, you decide when and how many units to buy, and you own the units until you decide to sell them.

No. When you invest in our unit trusts, there is no fixed amount that you need to commit to for a set investment period. It’s your investment - you decide how much, when and how you would like to invest.

You can start with either:

• A combination of a minimum monthly debit order of R1 000 and a minimum initial lump sum investment of R2 500, or
• A minimum lump sum of R50 000.

Once your investment has started, you can add lump sums of R1 000 or more at any time.

If you are investing in the name of an investor younger than 18 (i.e. a minor), these minimums differ. 

While there are different definitions of investment risk, at Allan Gray, we view investment risk as the probability of permanently losing money. Because investment returns are not guaranteed, there is a chance that you might end up with less than what you invested if you withdraw after a downturn.

The level of investment risk associated with each unit trust depends on the underlying assets of that unit trust. For example, the risk of losing money is higher in an equity-only unit trust than in a unit trust that invests in a mix of assets. Generally, higher investment risk comes with higher potential long-term investment returns. However, you would typically need to remain invested for a longer period of time. This is because these investments move up and down over the short term, and if you need to access your money sooner than expected, you may lock in losses.

While your money is invested, the overall value of your investment is likely to go up and down as market prices move. These ups and downs are known as fluctuation or volatility. The level of fluctuation you can expect when invested in a particular unit trust will depend on the underlying assets the unit trust invests in. For example, you will likely experience more fluctuation in an equity-only unit trust than in a unit trust that invests in a mix of assets.

Your decision should depend on how much return you want to earn and whether you are comfortable with ups and downs or prefer stability.

Thinking about how long you have to invest for, and how quickly you might need to access your money can help you weigh the return you want against the stability you need.

Learn more about striking a balance between risk and return, which is an important part of choosing a unit trust.

Alternatively, get help choosing an investment that’s suitable for you.

If you are not comfortable making your own investment decisions, you may wish to speak to a good, independent financial adviser.

Your investment growth depends on the return your unit trust earns, which comes from the performance of the underlying investments that the investment manager chooses. There is no set return that you earn as the value of your units fluctuates and may go up and down. Some unit trusts offer stability and low risk where others, like the Allan Gray Balanced Fund, offer a higher potential long-term return but you have to be comfortable with taking on greater risk. You can use our investment value calculator to see what your investment could be worth over time. 

Yes. You can make a withdrawal from your investment at any time, via your secure online account, which you will receive when you start your investment. There are no penalties for withdrawing and it takes three to five business days for the money to reflect in your bank account.

No. There are no penalties for withdrawing from your investment and you can change, stop and restart your debit order whenever you need to, at no extra cost.

The fees depend on the unit trust you select. When you invest in Allan Gray unit trusts our investment management and administration fees are charged within our unit trusts and deducted before we publish the unit trust’s performance. This means that no fees come off your initial investment, and no additional fees are deducted from your investment balance as you go along. The return you see is what you get. Learn more about our investment management fees.

Yes. You can open this investment in your name, or in your child's name. If the investment is in your own name, it belongs to you for its duration and you will need to declare contributions, withdrawals, transfers, net returns, dividends and capital gain/loss on your tax return.

You can invest on behalf of your children (the amount donated above R100 000 will be subject to donations tax in your hands), but the investment must not be completed in your tax return; it needs to be completed in your child’s tax return, but only if they earn other income in their own right, or have deductions to claim, that makes it necessary for them to submit a tax return. Your child takes control of the investment at the age of 18.

The Allan Gray Tax-Free Investment Account allows you to earn a return from the unit trusts of your choice without being taxed on the income or capital gain. You can invest up to R36 000 per year and R500 000 over your lifetime.

In a basic unit trust investment (i.e. not a tax-free investment account), different types of tax may apply, depending on the underlying investments:

Dividend withholding tax (DWT)

• 20% of any dividends is usually deducted within the unit trust directly from the dividend amount and immediately decreases the return the unit trust earns.
• No DWT is deducted in a tax-free investment account.

Income and capital gains tax

• Any interest income and capital gains must be declared to SARS and if they are above the tax thresholds (the first R23 800 of interest income and R40 000 of capital gains tax for people under 65) you will be liable for tax on your return calculated according to your marginal income tax rate.
• The return you earn from your unit trust would be indirectly lowered through your increased tax liability.
• Although there will be no immediate effect on your return, if you are already paying tax on your investment return (i.e. it is above the thresholds), you will benefit from income and capital gains tax savings in a tax-free investment account when you are assessed.

It is your responsibility to make sure that you don’t go over the limits of R36 000 per tax year and R500 000 over your lifetime. These limits apply to the total of all your tax-free investments across different companies. Keep in mind that having more than one tax-free investment account makes it harder to keep track of your investments.

You can check your total contributions to your Allan Gray Tax-Free Investment per year, or since the start of your investment, whenever you need to via your secure online account. You could also consider keeping a record of your contributions so that you can check how much you have contributed before you make any additional investments. 

You will pay a penalty to SARS of 40% of any amount you invest above the maximum. For example, if you invest R38 000, which exceeds the annual limit by R2 000, you will need to pay R800 (40% of the R2 000 excess) to SARS when you complete your tax assessment.

Yes. You can make a withdrawal from your investment at any time. There are no penalties for withdrawing and it takes five to six business days for the money to reflect in your bank account. However, withdrawals do not affect how much you are allowed to contribute – you can’t replace any amount you withdraw.

No. There are no penalties for withdrawing from your investment and you can change, stop and restart your debit order whenever you need to, at no extra cost.

A retirement annuity (RA) is also tax free, and in addition, any investments you make into an RA are tax deductible (within certain limits), which means that they reduce your taxable income for the year. However, when you invest in an RA you cannot access your money until you leave the fund any time after you reach 55 years of age.

If you are taxed at more than 30%, an endowment offers tax savings, as the income tax rate in an endowment is fixed at 30%. However, there are restrictions on both your investments into an endowment and the withdrawals you may make.

Yes. You can open this investment in your name, or in your child's name. If the investment is in your own name, it belongs to you for its duration and you will need to declare contributions, withdrawals, transfers, net returns, dividends and capital gain/loss on your tax return.

You can invest on behalf of your children (the amount donated above R100 000 will be subject to donations tax in your hands), but the investment must not be completed in your tax return; it needs to be completed in your child’s tax return, but only if they earn other income in their own right, or have deductions to claim, that makes it necessary for them to submit a tax return. Your child takes control of the investment at the age of 18.

One of the main risks retirees face is outliving their retirement savings. Many of us will live for 30 years beyond retirement age, so we expect our retirement savings to ‘work’ for as long as we have worked.  With this in mind, the ideal time to start saving for your retirement is with your first pay cheque. A good rule of thumb to allow you to maintain your lifestyle later on is to save 17% of your salary starting at age 25. If you start later, you will naturally need to save more or consider retiring later.

If you need help putting together a retirement savings plan, you may wish to consider talking to an independent financial adviser.

A unit trust is a type of investment that provides easy and affordable access to financial markets. Your money is combined with the money of other investors and our investment managers use the pool of money to buy underlying investments, such as equities, bonds, cash and property, depending on the unit trust objective. The unit trust is split into equal portions called 'units' that are allocated to you according to the amount of money you invest and the price of the units on the day you buy them.

Unit trusts are beneficial as you buy units in the unit trust of your choice, you decide when and how many units to buy, and you own the units until you decide to sell them.

No. When you invest in our unit trusts, there is no fixed amount that you need to commit to for a set investment period. It’s your investment - you decide how much, when and how you would like to invest.

You can:

• Set up a monthly debit order of R1 000 or more which you can change as your needs change.
• Start with a lump sum (minimum R50 000) or
• Add a smaller lump sum (R1 000 or more) with your debit order.

Once your investment has started, you can add lump sums of R1 000 or more at any time.

If you are investing in the name of an investor younger than 18 (i.e. a minor), these minimums differ.

Contributions to a retirement annuity are tax-deductible (subject to certain limits). This means that you may be taxed on a lower taxable income amount and could receive money back from SARS at the end of the tax year. The income and capital growth earned on your investment until you retire is also tax-free.

Example 1

You earn a salary of R300 000 in the 2022/2023 tax year, as well as a bonus of R100 000, and you invest R50 000 in a retirement annuity. From 1 March 2016, the maximum allowable deduction will be determined as the greater of:

• 27.5% of taxable income, or
• 27.5% of remuneration

Limited to R350 000 per year.

In this example, your taxable income is your remuneration (a total of R400 000). 27.5% of R400 000 is R110 000. This is less than the annual limit of R350 000, so your full contribution of R50 000 will be allowed as a deduction for the 2022/2023 tax year.

Example 2

You earn a salary of R900 000 in the 2022/2023 tax year, as well as commission of R400 000, and invest R370 000 in a retirement annuity. From 1 March 2016, the maximum allowable deduction will be determined as the greater of:

• 27.5% of taxable income, or
• 27.5% of remuneration

Limited to R350 000 per year.

In this example, your taxable income is your remuneration (a total of R1 300 000). 27.5% of R1 300 000 is R357 500. This is greater than the annual limit of R350 000. The difference between the actual contribution made (R370 000) and the maximum deduction allowed (R350 000), R20 000, will be carried over to the next tax year and will be seen as a ‘current’ contribution made in that year.

You can apply for early retirement if you become permanently disabled. You may also be able to withdraw your full investment if you have emigrated from South Africa, as recognised by the South African Reserve Bank (SARB) for the purpose of exchange control, and your emigration application was submitted on or before 28 February 2021 and approved by the SARB on or before 28 February 2022; or if you have not been a South African tax resident for an uninterrupted period of at least three years on or after 1 March 2021; or if you have left South Africa at the expiry of a work or visit visa. You will be taxed on your withdrawal. Lastly, you may be able to access your money if the value of your investment is below the minimum requirements applicable at the time.

Your retirement annuity investment continues until you decide to retire after the age of 55 and take your money out to use it for a regular income. At least two-thirds of your investment must be used to purchase a product that will provide you with an income. You can take up to one-third of your investment as a cash lump sum if you need to. A higher proportion can be taken as cash if a portion of your investment has vested rights. You can also take your full investment as cash if the value without vested rights is R247 500 or less across your retirement annuity accounts.

When you invest in a retirement fund, Regulation 28 of the Pension Funds Act limits the maximum exposure that you may have to various asset classes. In order for your account to be compliant, your selection of unit trusts should have no more than 75% in equities, 25% in property and 45% in foreign assets. You may also simply invest in a unit trust that already complies, such as a balanced fund.

Download our Regulation 28 calculator

Your retirement annuity does not form part of the value of your estate, which means that your money will not attract estate duty. A board of trustees is responsible for running the retirement annuity and protecting the interests of all members.  If you die while you are still invested in your retirement annuity, in terms of legislation, the trustees must thoroughly investigate your dependants and/or beneficiaries and allocate your money according to need. This process can take up to a year.

Learn more about the death claims process.

The fees depend on the unit trust you select. When you invest in Allan Gray unit trusts, our investment management and administration fees are generally all charged within our unit trusts and deducted before we publish the unit trust’s performance. In this case, no fees come off your initial investment, and no additional fees are deducted from your investment balance as you go along. The return you see will be what you get. Learn more about our administration fees and investment management fees.

One of the benefits of a retirement annuity (RA) is that when you leave an employer you are not required to transfer your savings and you can continue investing in the same RA in your own capacity. However, you can transfer your existing RA to Allan Gray if you wish to. It is a good idea to check the terms and conditions of your existing RA to ensure that you understand any potential impact on your investment.

Learn more about the Allan Gray RA

The amount you transfer must be at least R50 000. After you transfer, you cannot continue contributing to a preservation fund.

This depends on your original fund and whether you have already taken any money from the retirement savings you are transferring to Allan Gray. If you transfer to a preservation fund and you have not already taken any money, you may be allowed a single withdrawal before you reach 55. Some funds impose restrictions on the amount you may take. You will be taxed on this withdrawal and this will affect your tax rate if you also take a cash amount at retirement. If you become permanently disabled, due to an injury or illness, you can apply for early access to your money. You will need to provide medical evidence and your application will need to be approved by the fund’s board of trustees.

You can transfer your savings in another preservation fund into the corresponding Allan Gray pension or provident preservation fund. This is known as a Section 14 transfer (in reference to the Pension Funds Act). These transfers can take some time. It's a good idea to check the terms and conditions of your preservation fund before you transfer, to make sure you understand any potential impact.

Learn more about transferring your preservation fund

When you retire you can take up to one-third of your investment as cash. The rest must be transferred to a product that can provide you with an income in retirement, such as a living annuity or a guaranteed life annuity. You can take a higher proportion as cash if a portion of your investment has vested rights. You can also take your full investment as cash if the value without vested rights is R247 500 or less across your accounts. Your original fund’s rules may have different, or additional, restrictions in place.

When you invest in a retirement fund, Regulation 28 of the Pension Funds Act limits the maximum exposure that you may have to various asset classes, for example: 75% in equities, 25% in property and 45% in foreign assets. You can comply by simply investing in a unit trust that already complies, such as a balanced fund. If you choose to invest in multiple unit trusts, you must make sure that your combination of unit trusts complies.

Download our Regulation 28 calculator

Your preservation fund does not form part of the value of your estate, which means that your money will not attract estate duty. A board of trustees is responsible for running the preservation fund and protecting the interests of all members.  If you die while you are still invested in your preservation fund, in terms of legislation, the trustees must thoroughly investigate your dependants and/or beneficiaries and allocate your money according to need. This process can take up to a year.

Learn more about the death claims process. 

The fees depend on the unit trust you select. When you invest in Allan Gray unit trusts, our investment management and administration fees are generally all charged within our unit trusts and deducted before we publish the unit trust’s performance. In this case, no fees come off your initial investment, and no additional fees are deducted from your investment balance as you go along. The return you see will be what you get. Learn more about our administration fees and investment management fees.

Deciding on a product that has to provide you with an income for the rest of your life is one of the most important financial decisions you have to make. If you don’t feel equipped to make this decision unaided, you should consider talking to an independent financial adviser.

An alternative product to consider is a guaranteed life annuity. When making this decision, consider your personal needs, your risk appetite and the key differences between the products available:

• In a living annuity, any investment return earned belongs to you and gives you the chance to increase your income over time. In a guaranteed annuity, your income is known in advance, and any additional investment return belongs to the product provider.
• A guaranteed life annuity will provide you with a specified income for a set period of time (usually until you die), while your income from a living annuity, and how long it will last, will depend on the return you earn and how much you choose to withdraw. If you draw too high an income, you may run out of money.
• The company that provides the guaranteed annuity carries all the investment risk. In a living annuity you take the risk that your investment will not perform as you expect, and that you may need to draw a lower income than you would like. 
• Living annuities can be left to your beneficiaries when you die but guaranteed annuities cannot be passed on to beneficiaries.

Use our retirement preparation guide to learn more about your retirement income options.

A living annuity is legally restricted to only accept transfers from retirement funds:

• Preservation Funds
• Pension and Provident Funds
• Retirement Annuities
• Other Living Annuities

You may not add any every day savings (such as debit orders, lump sums from your bank account or other investments) to your living annuity.

According to legislation, you must draw between 2.5% and 17.5% of the value of your total investment per year. However, research has shown that your income has the best chance of lasting until you die if you withdraw a fixed rand amount (rather than a percentage) starting at 4% or less at retirement, and only increase the rand value of your income by inflation each year after that.

Read an article explaining our research into making your living annuity last

Use our retirement preparation guide to see your estimated retirement income if you are ready to retire now.

You can change your income level and the frequency of your payments on the anniversary of the date that your living annuity was started. It is important that you remember to make the change on this date – otherwise you will have to wait until the next year to make changes.

A living annuity is legally restricted to only accept retirement savings transfers. You cannot continue investing into your living annuity.

The return you earn in a living annuity is not taxed. However, your income is taxed at your marginal income tax rate, depending on the level of income you choose.

We will deduct the necessary tax from your income payment and pay this over to SARS on your behalf.

The fees depend on the unit trust you select. When you invest in Allan Gray unit trusts, our investment management and administration fees are generally all charged within our unit trusts and deducted before we publish the unit trust’s performance. In this case, no fees come off your initial investment, and no additional fees are deducted from your investment balance as you go along. The return you see will be what you get. Learn more about our administration fees and investment management fees.

You can transfer an existing living annuity from another provider to Allan Gray, or from Allan Gray to another provider. This is called a Directive 135 transfer.

You can also transfer your living annuity to a guaranteed annuity. However, if you already have a guaranteed annuity, you cannot transfer it to a living annuity.

Depending on various factors such as global economic conditions and the exchange rate, at times offshore investments may perform better than local investments and vice versa. Having a portion of your investment offshore allows you to spread your investment risk because you have the potential to earn return under different conditions, as well as from a wider variety of industries and companies than is available locally.

• You get offshore exposure when you invest in the Allan Gray Balanced, Equity or Stable Fund.
• Up to 45% of these unit trusts may be invested offshore.
• If you want additional exposure, we offer rand-denominated and foreign currency offshore unit trusts.

Allan Gray is based and regulated in South Africa and your investment account is in South Africa.

When you invest in one of the rand-denominated offshore unit trusts although your unit trust investment is in rands, your return comes from underlying offshore investments, such as shares, bonds, currency, whose performance depends on offshore markets rather than local markets.

The foreign currency unit trusts are based offshore and are managed by an offshore investment manager. Your investment is in foreign currency and your return comes from offshore investments. When you wish to make a withdrawal, we can transfer your investment to an offshore bank account registered in your name, without any further SA exchange controls.

As we are a South African company we can be impacted by changes to the South African laws, including the foreign exchange regime. You may take some comfort in the fact that although Allan Gray is a locally registered company, your investment is in foreign assets and in foreign currency. When you wish to make a withdrawal, we can transfer your investment to an offshore bank account registered in your name, without any further SA exchange controls.

Yes, you can contact us to invest directly with Orbis. However, the minimums are higher than investing via the Allan Gray Offshore Investment Platform.

For estate planning, your foreign currency investment can be dealt with locally in the estate under a South African executorship. The investment will not be subject to the administrative complications of estates law in offshore jurisdictions or require the appointment of an offshore executor, as is the case with many offshore-domiciled investments. This simplifies matters considerably for the deceased's South African executor.

The fees depend on how you invest offshore and the investment options you select.

When you invest in any of Allan Gray's rand-denominated offshore unit trusts, the administration and annual investment management fees are generally all charged and deducted before the unit trust’s performance is published. Learn more about our investment management fees.

You can also invest with other investment managers through Allan Gray. Learn more about our administration fees.

If you want to invest money offshore and your marginal tax rate is higher than 30%, an offshore endowment offers tax efficiency and estate-planning benefits.

Allan Gray Life Guernsey branch can facilitate the conversion of your rands, through an authorised dealer at a preferential rate, into the currency of the unit trust you want to invest in. If you are investing using rands, you will need to use your own offshore allowance, and you may need tax clearance.

Yes, but there are restrictions. Your Allan Gray Offshore Endowment ("the plan") is made up of multiple underlying policies. You are only entitled to a single withdrawal per policy during a five-year restriction period, and the amount you may withdraw is limited. If the plan is not in a restriction period, you may make unlimited withdrawals. A withdrawal may trigger a capital gains tax (CGT) event, as units need to be sold. Any tax due is deducted when you withdraw.

Yes, but your five-year restriction period will be extended (if your investment is already in a restriction period) or a new one will start if, in any one policy year, you invest more than 120% of the higher of your contributions in either of the previous two years.

No. There are no penalties for withdrawing from your investment, although you are only entitled to a single withdrawal per policy during a restriction period. You can change your unit trust selection at any time at no extra cost, but switching between unit trusts may trigger a capital gains tax (CGT) event.

If you have appointed beneficiaries, your investment can be paid or transferred (as applicable) to them immediately on your death without having to wait for your estate to be wound up. Although the investment will form part of the deceased estate for the calculation of estate duty (subject to certain exemptions), if there is an appointed beneficiary, there will be no executor fees. 

There are various types of fees that may apply to your investment: investment management fees, administration fees, independent financial adviser fees, discretionary investment management fees and fund access fees.

Learn more about our administration fees or see our Offshore Endowment Fund List for more information about the applicable fees in the Allan Gray Offshore Endowment.

The Allan Gray Offshore Endowment offers a select list of foreign currency funds managed by offshore investment managers, including those managed by our offshore partner, Orbis. We believe that a limited selection of funds designed to meet most long-term investment needs enables investors to more easily do their research and make well-considered decisions.

Our selection of unit trusts is demand-driven. We review our range annually, guided by input from financial advisers. We have also engaged the services of an independent fund rating company, Fundhouse, to rate the unit trusts we offer. We only offer unit trusts that have been registered by the Financial Sector Conduct Authority and we require unit trusts to be of a minimum size for liquidity purposes. However, we do not endorse third-party funds or monitor their performance.

Please see our Offshore Endowment Fund List for more information about the unit trusts available through Allan Gray.

The fees depend on the unit trust you select. When you invest in Allan Gray unit trusts, our investment management and administration fees are generally all charged within our unit trusts and deducted before we publish the unit trust’s performance. Learn more about our investment management fees.

You can also invest with other investment managers through Allan Gray. Learn more about our administration fees.

The selection of unit trusts available on the platform is demand-driven and reviewed annually. We establish demand by surveying the independent financial advisers who work with us. We have also engaged the services of an independent ratings company to rate the unit trusts we offer.

We only offer unit trusts that have been registered by the Financial Sector Conduct Authority and we require unit trusts to be of a minimum size for liquidity purposes. We aim to offer more choice where there is more potential for differences in performance. This means we offer more equity unit trusts than asset allocation/fixed income unit trusts, and at the same time we ensure we do not have too much duplication but rather a spread across the asset classes.

Rand-based offshore unit trusts are available, which you can include with local unit trusts in the same portfolio. We also have a wide range of foreign currency unit trusts available on the platform. You will need to complete a separate application to invest in these, and they will be held in a separate account.

Learn more about investing offshore

To make space for new unit trusts, we ‘cap’ unit trusts that are not taking flows over at least a one or two-year period. Capping means we keep the unit trusts open for existing investors, but they won’t be available for new investors. We may ask investors to switch out of a unit trust if we decide to close it, but only if very few investors remain in the unit trust – and we always give investors three months’ notice of our intention to do so.

The optimal way to approach planning for education costs is to invest as much as you can for the later schooling years (high school and tertiary education), giving your investment time to grow. With more time to invest, you can choose a longer-term investment option that is likely to deliver higher return over time.

But investing helps in the shorter term too. You can ease the pressure on your salary during your child’s pre- and primary school years by investing in a more stable short-term investment for the following year, or the next few years.

According to our research, investing R3500 from the birth of your child makes it likely that you would be able to pay all fees from your investment and the financial impact on you would be 29% lower than paying from your salary.

However, since education costs are extremely variable and depend on your personal priorities and circumstances, there is no set amount you need to save up, and therefore no set amount you need to contribute.

With education, the point of investing isn’t to meet a goal but to relieve this burden on your income. This means that instead of trying to find out exactly how much you should be saving, you just need to allocate as much of your budget as you can, as soon as you can.

We have a simple range of four unit trusts to choose from. You can save some money in a short-term option for fees in the near future, to relieve the pressure on your salary, and some into a longer-term option aiming to grow your investment so that it covers the costs of those schooling years.

We have two options suitable for the short term:

• The Allan Gray Money Market Fund is suitable for investing for about one year. This means it can be used to save money in one year to pay fees in the next. It aims to deliver higher return than bank accounts.
• The Allan Gray Stable Fund aims to beat inflation and is a good option for investing for two to three years. There may be some fluctuation within a two-year period.

We also have two longer-term options:

• The Allan Gray Balanced Fund is our flagship unit trust for long-term growth. It is suitable for investing for three or more years.
• The Allan Gray Equity Fund offers the highest potential return but is only suitable if you know you won’t need access to the money you invest in it for at least five years, and you are comfortable with significant fluctuation that may last for a few years.

Many people choose the Balanced Fund to grow their money over time, while also saving some money in the Stable Fund for use in the shorter term. Your choice depends on your needs and what level of fluctuation you are comfortable with.

When you invest in a unit trust you buy units. You can see how many units you own at any time via your secure online account or on your statements. You decide how many units to buy and you can buy more and sell them as you choose to. There are no set premiums and no penalties for making changes, stopping your debit order or withdrawing from your investment. In a basic unit trust investment there are also no withdrawal restriction periods. On the other hand, education policies may have specified premiums and set investment periods that may not be flexible.

These products also often have additional features such as built-in life insurance and guaranteed payments. While these features may be convenient, they add additional costs that reduce the amount available for investment. With a unit trust investment, the focus is on delivering investment return. You should think about your risk protection separately as part of your insurance cover. This is likely to be more cost effective. In terms of guaranteed return, the benefit of the guarantee often doesn’t justify the costs and when you are investing for the long term, if you can wait out the ups and downs you can benefit from higher return over time. If you are not able to wait, there are shorter-term options that offer higher stability, without the need to pay for a guarantee.

Sometimes things don't go as planned. If you decide not to use the money in your investment to pay school fees, you can use it to finance a gap year, fund a business venture or for anything you choose to. With no restrictions on usage, a unit trust investment gives you more control than many specialised education products.

Yes, you can open an account in your child’s name. While your child is below the age of 18, an authorised representative (such as a parent or legal guardian) will need to manage the investment on their behalf. Your child will gain full control of their investment when they reach the age of 18.

Unlike many other endowments, when you invest into the Allan Gray Endowment you invest into your choice of unit trusts.

• You decide how much and when to invest.
• You can make changes to your investment at any time and we do not charge any fees or penalties.
• Your investment return depends on the unit trust performance. You are responsible for making sure your unit trust choice suits your needs.

Although there is a legal restriction period of 5 years during which you have limited access to your money, when you do make a withdrawal, we do not charge any fees or penalties.

It is important to understand that you are only allowed one withdrawal during the restriction period and you cannot take a loan out against your investment.

The Allan Gray Endowment does not include any insurance cover.

You may only withdraw money once during a restriction period. If your initial restriction period is extended because you invested more than legally allowed in terms of the 120% rule, you may only make one withdrawal during the entire extended restriction period. When you are not in a restriction period, you may withdraw any amount, at any time. You may also set up a regular monthly withdrawal.

In the Allan Gray Endowment, the tax due is deducted when you withdraw from your investment.

If you invest more than 120% of the higher of either of the previous 2 years’ total investments, your restriction period will be extended by 5 years (if your investment is already in a restriction period) or a new one will start. This restriction period will apply to your total investment amount.

If your marginal income tax rate is higher than 30%, you can benefit from tax savings in an endowment. You can also use the endowment for estate planning purposes.

As the person investing in the Allan Gray Endowment, you will be known as the policyholder, or the owner of the investment. You can then make various nominations depending on your estate planning needs.

You can choose to appoint no life assured, one life assured or multiple lives assured. You can be the life assured, or you can nominate other people.

If you have chosen to nominate one or more lives assured, the endowment will come to an end when the last life assured dies. Your money will be paid out directly i.e. the beneficiaries do not need to wait for the estate to be wound up. You can also nominate a beneficiary for ownership to inherit the investment and become the new policyholder if you die.

If no life assured is nominated, ownership of your policy will transfer to your beneficiary for ownership when you pass away. If there is no beneficiary for ownership, your money will be paid out directly to your beneficiary for proceeds.

No executor's fees will be charged on the amount paid out, but it will form part of the estate for the calculation of estate duty.

The fees depend on the unit trust you select. When you invest in Allan Gray unit trusts, our investment management and administration fees are generally all charged within our unit trusts and deducted before we publish the unit trust’s performance. In this case, no fees come off your initial investment, and no additional fees are deducted from your investment balance as you go along. The return you see will be what you get. Learn more about our administration fees and investment management fees.

Each employee individually applies to become a member of the Allan Gray Retirement Annuity. Every month, the employer deducts the agreed monthly contribution from each employee’s salary and pays this over to Allan Gray on the employee’s behalf. As individual members of the Allan Gray Retirement Annuity, the employees make their own unit trust selection, and receive quarterly statements from Allan Gray.

A minimum of five employees is required to make use of the group retirement annuity system. 

R1 000 per month per employee.

Allan Gray will act on the instructions and payments received from employers. Employers deduct employees’ contributions from their salaries and pay these via EFT (electronic fund transfer) to the Allan Gray Retirement Annuity bank account on a monthly basis. To help employees monitor and reconcile the contributions made on their behalf, and to check that these contributions have been invested into their selected unit trusts, Allan Gray will send quarterly statements to each employee. Employees can also monitor and manage their investments by registering for a secure online account. Employees may change their contribution levels with their employer.

Yes, but Allan Gray cannot enforce this contractual obligation.

If an employee resigns, they may continue to be a member of the Allan Gray Retirement Annuity in their own right.  They can continue investing via a debit order, stop contributing without penalties and start contributing again any time.

We believe independent financial advice plays an important role in helping:

• You to decide on the most appropriate retirement funding product for your staff, and
• Your employees to make the best investment decisions for their circumstances.

Allan Gray is not authorised to and is not able to provide advice or any guidance on whether the Allan Gray Group Retirement Annuity is the most appropriate option for an employer or for individual employees. It is the role of the individual employees to select their unit trusts. Allan Gray respects the right of all employees to choose whether or not they need advice, who they receive advice from and what fee is negotiated between themselves and their advisers.

Umbrella funds provide cost savings as they are able to offer lower administration costs than standalone funds, due to economies of scale from costs being spread across all participating employers. In addition, the umbrella fund appoints a board of trustees, which undertakes administrative, governance and compliance duties for the fund on behalf of all participating employers. Individual employers who set up standalone retirement funds have to absorb all these costs themselves.

The employer joins the Fund and provides Allan Gray with their employees’ details, including the contribution amounts to be deducted from employees’ salaries each month. These contributions are paid to Allan Gray by the employer on their employees’ behalf.

Once the first contribution is made, each employee becomes a member of the Fund and an Allan Gray client.

The Allan Gray Retirement Umbrella Fund can be set up for any number of employees and is suitable for larger employers that may get the benefit of scale to pay lower administrative costs.

The minimum total contribution amount required from the scheme is R50 000 per month. We require the average contribution from members to be R1 000 per month.

You can contact our dedicated support specialists at groupsavings@allangray.co.za to obtain information about the product and the process of joining the Fund. 

If an employee resigns, they will stay invested in the Fund as a non-contributing member (also known as a paid-up member) of the Fund. Members will not be able to make additional contributions to the Fund but they will still have access to their investment. 

Visit our Leaving your employer guide to learn more about the options available to an employee when they resign.

The Fund offers approved risk benefits, and you have the flexibility of choosing your own unapproved risk benefits.

For approved risk benefits, the Fund has been issued with an insurance policy, based on a master policy, by four insurance companies – Sanlam, Hollard, Old Mutual and Capital Alliance – with a separate agreement with Momentum also in place. Our proposal process ensures that employers and their employees enjoy the benefit of having approved risk benefits automatically placed with the insurer who offers the most competitive premium based on the same terms and conditions.

For unapproved risk benefits, employers can choose unapproved risk policies with any insurer. Allan Gray offers to facilitate the payment for unapproved risk benefits, creating a seamless process for the employer that simplifies their payroll administration at no additional cost.

For more information regarding the risk benefits, please contact umbrellafund@allangray.co.za.

Members will pay the following fees to participate in the Fund:

• An administration fee levied for administrative services.
• An investment management fee, which will be dependent on the underlying investment portfolios that members are invested in.
• If there is an adviser appointed to the scheme, members will pay a financial adviser fee.

The Fund must be notified of the member's death as soon as possible. The notification should include:

• a copy of the member's death certificate,
• the member's personal details, and
• the member's investor number

The member's death benefit will be the market value of their investment accounts in the Fund. This figure is calculated on the day the deceased member's investments are switched into the Allan Gray Money Market Fund.

If an active member terminates employment before reaching their normal retirement age, they will be entitled to access 100% of their benefit as a cash lump sum. If they decide not to access their benefit, they will become a paid-up member in the Fund and will be entitled to access their full benefit as a cash lump sum at any time thereafter. If such a member emigrates, they do not need to apply for an emigration withdrawal; they can simply submit a full withdrawal instruction to the Fund. The cash lump sum must be paid in rands into a South African bank account in the name of the member.

Members who terminate employment after reaching their normal retirement age may not be entitled to access 100% of their benefit as a cash lump sum. Such members will only be entitled to access a 100% withdrawal if their emigration application was submitted on or before 28 February 2021 and approved by the SARB on or before 28 February 2022; or if they have not been a South African tax resident for an uninterrupted period of at least three years on or after 1 March 2021; or if they have left South Africa at the expiry of a work or visit visa.

If an employer closes their company scheme, their scheme will be liquidated. Members will be entitled to their contributions, including their employer’s contributions and any investment returns. In addition, they are entitled to any amount that may have been transferred from the previous fund.

The member’s benefit will be paid once the liquidation process of the scheme is finalised, which takes approximately 6 to 12 months.

Members have the following options for their benefit:

• Remain paid–up in the Allan Gray Umbrella Retirement Fund.
• The benefit can be transferred to the Allan Gray Pension or Provident Preservation Fund.
• The benefit can be transferred to another pension fund, provident fund or retirement annuity.
• The benefit can be transferred to a registered preservation fund.
• Members can withdraw the benefit amount in a cash lump sum (subject to tax).

Employees can use their secure online account to switch portfolios, change nominees and update their personal details. Additional contributions to the Umbrella Retirement Fund over and above the regular monthly amount cannot be done online and must be initiated through the payroll representative of the employer.

Retirement date calculator

If a member becomes permanently disabled (due to an injury or illness), they may apply for early retirement (i.e. prior to their 55th birthday, if they are an Active Member, or prior to their Normal Retirement Date, if their employment was terminated prior to that date). To apply, the member will need to submit a ‘Request for approval of early retirement’ form, together with the necessary supporting documents, which includes a report by a medical practitioner. The Board of Trustees will need to approve the application for early retirement based on medical evidence obtained at the member’s cost.

Yes, you can transfer your tax-free investment from another financial services provider, including banks, life assurers and other investment companies. If you have an existing tax-free investment with us the investments will be consolidated into one account, if not, a new account will be opened. The transfer will not be seen as a contribution and therefore will not form part of your annual contribution amount.

For example: If you have not made any contributions toward your tax-free investment for the current tax year and wish to transfer R36 000 (contributed in previous years), you will still be allowed to contribute R36 000 for the current tax year. Contributions made from other types of investment accounts, for example a basic unit trust account, will form part of your annual contribution amount.

If you do not have an existing tax-free investment account with us the minimum transfer amount is R36 000, or any amount above R1 000 together with an ongoing debit order of at least R1 000 per month. If you have an existing tax-free investment with us the minimum transfer amount is R1 000.

If you are investing in the name of an investor younger than 18 (i.e. a minor), these minimums differ. 

We do not allow partial transfers. You must transfer your full tax-free investment to us. This helps us monitor annual and lifetime contributions.

Yes, you may transfer part or all of your tax-free investment. If you wish to only transfer a part of your investment, a minimum balance of R20 000 must remain in your account.

An independent financial adviser is a professional who offers their clients advice that could cover a range of services, such as financial planning, tax and estate planning. They are independent of any service provider, and should have the objectivity and experience to help you make decisions that are right for and tailored to your circumstances.

This is different from a tied financial adviser who is employed by a specific service provider and may be incentivised to sell their employer’s products.

We are not licensed to give advice, however, we believe in the merits of good, independent advice. We therefore do not employ financial advisers but encourage you to work with an independent adviser to meet your investment goals.

A good IFA can help improve your financial outlook by:

• Creating a financial plan that is based on your financial goals, investment time frame and risk appetite.
• Helping you select products and underlying unit trusts that are aligned with your personal circumstances.
• Ensuring that returns objectives take inflation into account and that portfolios are sufficiently diversified.
• Providing guidance in times of uncertainty to help you avoid acting on your emotions and ensure that you remain committed to your goals.
• Rationally reviewing your finances and personal circumstances to ensure that your investment plan is tailored to your changing needs.

Some advisers charge a flat fee, while others charge a once-off consultation fee; some charge a percentage of your assets under management and others may receive commissions. It is important to consider the costs against the potential value that can be created over the long term.

When doing business with Allan Gray, IFAs can charge two types of fees: an initial fee and an annual fee. Fees are negotiated and agreed on between the IFA and the client, and must be within the below limits:

• An initial fee of up to 3% (excluding VAT) can be charged for new investments, additional contributions and debit orders. This excludes the Allan Gray Living Annuity, which has a maximum initial adviser fee of 1.5% (excluding VAT). The initial fee is deducted from your investment amount before your funds are invested.
• An annual fee of up to 1% (excluding VAT) can be charged. Where the initial fee is more than 1.5%, the maximum annual fee that can be charged is 0.5%. The annual fee is deducted from your investment value by selling units in your investment account on a monthly basis.

Yes. You will still have control and be able to view and transact on your investments via your secure Allan Gray Online account, irrespective of the level of control you have given your adviser. It is important to consult with your IFA before making changes to your investments so that they can provide you with guidance that aligns with your financial goals. 

When appointing an IFA, you can choose to:

• Appoint an IFA on some, but not all, of your investment accounts
• Have your transaction confirmations, statements and other communications sent to you and/or your IFA
• Authorise your IFA to submit instructions on your behalf

You can visit our Find an independent financial adviser page for a list of IFAs in your area. Please note the details of the IFAs provided are for information purposes and that the IFAs listed operate independently of Allan Gray. Allan Gray is licensed to provide intermediary services but not authorised to provide financial advice. 

By law, all financial advisers must be licensed with the Financial Sector Conduct Authority (FSCA). To obtain a licence, IFAs need to pass regulatory exams, fulfil the FAIS Fit and Proper Requirements, and on an ongoing basis, must prove to the FSCA that they are developing and maintaining their professional competence. You can check the licensing of your IFA via the FSCA Authorised Financial Service Providers page.

On the Find an independent financial adviser page, you can search for a specific IFA or provide information to generate a list of IFAs that meet your specific needs. Search results are presented by “Distance to adviser”, or you can sort the results by “Adviser rating”.

You can engage with various IFAs before deciding to appoint an IFA that meets your specific needs. Some questions to ask before appointing an IFA could include:

• What financial services does the IFA offer?
• What are the IFA’s qualifications and years of experience?
• What is the IFA’s fee structure?
• What is the average time spent with clients in person, over the phone or by email?
• Determine other personal preferences (e.g. languages the IFA can comfortably consult in).

Yes. You can change or remove your IFA if you no longer want to make use of their services.

Allan Gray requires a signed instruction to change your IFA, or an email request from your email address on record to remove your IFA. Before an IFA is removed, Allan Gray grants the IFA a grace period of five business days to allow them an opportunity to discuss the cancellation instruction with you.

If you have a complaint about the advice given by an IFA, you can address your concerns with the financial services provider or contact the Ombud for Financial Services Providers.

Postal address
P O Box 41, Menlyn Park, 0063

Contact number
0860 663 274

Email
info@faisombud.co.za