IN-FUND LIVING ANNUITY OPTION (IFLA)
As a member of the fund, you have the option of moving a portion of or all your retirement savings into a living annuity provided by the fund when you retire. Investing in this living annuity is effectively the same as ‘buying’ a cost-effective pension. Annuitants continue to benefit from not only the low investment fees they were used to as active members of the Fund but also the sound governance practices overseen by the Board of Trustees.
At retirement when you invest in the In-Fund living annuity, you select one of two options which will determine the investment of your retirement capital and the amount of your monthly pension:
Trustee endorsed option
This means that your savings are invested for you in the consolidation phase of the fund. The amount of money you can take (draw down) from your retirement capital as a pension income is a fixed percentage of your retirement capital. This percentage then increases every five years
Customised option
You can choose to invest in any one or more of the LA Retirement Fund’s four investment options (i.e. the accumulation, consolidation or preservation phases or the Shari’ah investment portfolio). This flexibility also allows you to choose the investment option from where your monthly income must be paid. In addition, you are required to select your draw down rate from a range applicable to your age band. This effectively allows you to choose the percentage of your total retirement savings you can access as your pension income. You can then adjust this draw down rate every year by selecting the appropriate rate to meet your needs from the range provided.
As an In-Fund living annuitant, you may elect to switch from the trustee endorsed option to the customised option and vice versa once a year on the anniversary of your retirement.
Of course, you don’t have to invest your retirement savings in the LA Retirement Fund In-Fund living annuity when you retire. You also have the option of investing your savings in any other annuity you choose, or taking some, or all, of your savings in cash*.
The benefit is subject to taxation
The payment of cash lump sums on retirement is subject to the annuitization rules that came into effect on 1 March 2021. Please click here to read more about this.
All insurance benefits (death, disability, funeral and the critical illness benefit) cease when you retire from the Fund. If you purchase the In-Fund Living Annuity you have the once-off option of purchasing an affordable funeral cover benefit for yourself and your spouse. You may choose the cover amount applicable to your age group.
See our In-Fund Annuity Options Q&A – Click Here
Watch a webinar on the In-Fund Living Annuity here
POOLED ANNUITY ACCOUNT OPTION (PAC)
The Pooled Annuity Account (PAC) was introduced with effect from 1 July 2024 to provide a pension for life for retiring members.
This is something that members may be interested in purchasing on retirement (in addition to the IFLA or simply on its own). It is also an appropriate option for In-Fund Living Annuitants who may be concerned about the sustainability of their retirement income.
The PAC does not operate like the IFLA. There is no investment account with a retirement capital balance to be calculated by the Fund. Pensioners therefore do not elect a drawdown rate that determines both the value of their monthly income and the value of their remaining retirement capital.
A pension is calculated for life by the actuary and the pensioner is therefore not required to make an investment decision. The pensioner assets are invested according to a Liability Driven Investment (LDI) Strategy (LDI Growth and LDI De-risk). This investment strategy is aligned to the Fund’s Pension Increase Policy.
More details on the PAC are available in the In-Fund Annuity options Q&A on the Fund’s website.
With effect from 1 July 2024, you have the option of purchasing both an IFLA and a PAC annuity from the Fund. You would then receive an income from both the IFLA and PAC.
Please go to Fund Guides on the Fund’s website to read more regarding the IFLA and PAC in the In-Fund Annuity Options Q&A.
