Why can't I access my RA funds now?

Picture: Gallo Images/Getty
Picture: Gallo Images/Getty
A Fin24 user is in financial difficulties and wants to know if she can access her RA before age 55. She writes:

I have a retirement annuity (RA) that I have paid up and therefore do not contribute to any more.

There is around R40 000 in the fund that I am desperate to access as I am not coping financially at all right now.

It is about 10 years old and I understand the rules at the time dictate I will not be able to access this money till age 55; however, the money is sorely needed right now.  

At the time I made the policy paid up, I did start another investment where I would receive a full lump sum payment instead of the one-third on offer with RAs, so it's not like I am not saving any more.

What will happen if I cancel the RA? Do I lose the entire R40 000 or will I be charged cancellation fees and paid out the balance?

Are there any other options to somehow access this money or will I have to sue?  

I am pretty sure that constitionally I have a case because after all it is my money and I can prove I am still saving, but I want this money to assist me during this time of incredible financial woes.

It doesn’t make sense that I am literally starving at the moment but I have this money sitting in a fund somewhere with no way of accessing it.

Gavin Came, chairperson of the Financial Planning Committee of the Financial Intermediaries Association of Southern Africa, responds:

Unfortunately it is against the law for an RA fund to pay you any benefits before you turn 55.

There are two exceptions; firstly, in the event that you are permanently disabled and unable to work you may apply to take retirement by reason of disability.

Secondly, if you have formally emigrated from South Africa you may cash in your benefits.

There are discussions under way to propose limited access to RAs prior to retirement in cases of hardship. However, this is at an early stage and it may take a number of years before the law is changed.
The only advice I can give is that you take some short-term cash from your other investment.

 - Fin24

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