What Is the Best Performing Living Annuity in South Africa?
A living annuity is a retirement income product where you stay invested in a portfolio of your choice, draw an income between 2.5% and 17.5% of your capital per year, and the remaining balance passes to your beneficiaries when you die.
Finding the best performing living annuity in South Africa is not as simple as picking the top-ranked provider. No single insurer or platform is inherently the “best” because your returns come from the underlying investment funds you choose, not the brand name on the product wrapper. Old Mutual, Allan Gray, Ninety One, Sanlam, and Glacier all offer living annuities. The difference between them lies in fees, fund menus, and platform quality, not in any proprietary return engine.
That distinction matters enormously. Many people searching for a ranked list of top performers are, in reality, asking the wrong question. The right questions are: which funds does this platform give you access to, what does it cost annually, and how much are you drawing relative to what you have?
If you want to understand what an annuity is before comparing products, that context will help you interpret everything in this article. For the income-side question specifically, the work you do on sustainable living annuity drawdown rates will have more influence on your financial outcome than any provider ranking.
How Living Annuity Returns Actually Work
Living annuity returns are determined entirely by the underlying investment funds you select, not by the annuity platform itself. The platform is a legal structure and an administrative shell. The engine is the portfolio.
This is the single most important thing to understand, and it is where much of the confusion begins. When someone asks “which provider gives the best returns?”, the honest answer is that no provider guarantees returns on a living annuity. You carry the investment risk. In exchange for that risk, your capital can grow, your income can keep pace with inflation over time, and your estate retains whatever is left when you die.
A second source of confusion worth clearing up: retirement annuities and living annuities are not the same thing, even though the two terms appear interchangeably in many searches. A retirement annuity is a savings vehicle you use during your working years to accumulate capital, within a tax-advantaged structure. A living annuity is a drawdown vehicle you use after retirement to convert that capital into income. You save into a retirement annuity; you draw income from a living annuity.
The levers that actually drive your living annuity outcome:
- Fund selection. A balanced fund, an equity fund, or a money market fund will each produce very different long-term returns and volatility profiles.
- Total cost. Platform fees, fund management fees, and adviser fees compound over time. A one percentage point difference in annual costs is meaningful over a 20- or 30-year retirement.
- Drawdown rate. How much you take as income each year relative to your capital is the single biggest driver of whether your money lasts.
Under Regulation 28, which governs the investment limits inside retirement funds during the accumulation phase, your pre-retirement savings must stay diversified across asset classes. Once you convert to a living annuity, Regulation 28 no longer applies, and you have full discretion over your investment mix. That freedom is powerful, but it requires considered choices. For context on Regulation 28 investment limits during the savings phase, that article explains the rules in full. For low-cost retirement annuity options during the accumulation years, cost-conscious choices early compound into better retirement outcomes later.
The Major Living Annuity Providers in South Africa
Several well-established providers offer living annuities in South Africa, each with a different platform architecture, fee structure, and fund menu. The brand matters less than what it gives you access to.
The main providers currently operating in the South African market include:
Allan Gray. Allan Gray offers a living annuity that gives access to its own range of funds as well as external funds through a linked platform. Its reputation rests on long-term, value-oriented investment management. The platform is straightforward, and the in-house funds carry competitive costs for actively managed products.
Old Mutual. Old Mutual operates one of the broadest platforms in the country, giving clients access to a wide range of internal and external fund managers. Its scale means competitive administration pricing for larger balances. For a fuller picture of what the platform offers, the Old Mutual’s retirement and annuity platform review covers the detail.
Sanlam and Glacier. Sanlam’s wealth platform, Glacier, is one of the most widely used living annuity platforms among independent financial advisers. It provides access to a very large fund universe, including offshore funds and specialist options. Costs vary depending on the combination of platform fee, fund fee, and adviser fee.
Liberty. Liberty offers a linked living annuity through its platform with access to multiple fund managers. For detail on how its annuity product range is structured, Liberty’s annuity product range covers the specifics.
Ninety One (formerly Investec Asset Management). Ninety One is better known as a fund manager than a direct annuity platform, but its funds appear on most major living annuity platforms and are frequently used within living annuity portfolios.
Shari’ah compliant living annuities. If you require a Shari’ah compliant structure, several platforms offer access to compliant fund ranges. Old Mutual, Sanlam, and 27four (a specialist Shari’ah asset manager) all have options worth examining. The key is ensuring both the fund and the platform wrapper meet your requirements.
Are living annuities a sound investment? The honest answer is: they can be, if your drawdown rate is sustainable and your portfolio is appropriately positioned. If you draw too aggressively or hold too conservatively, they erode quickly. The product is not inherently good or bad. It reflects the choices you make within it. For context on how annuity structures differ from one another, that overview is useful before you commit to any single product type.
Living Annuity Providers Compared: A Snapshot
No single provider consistently outperforms all others because performance flows from fund selection, not platform branding. What you can compare meaningfully across providers is access, cost structure, and flexibility.
The table below offers a high-level comparison. Fee ranges are indicative; exact figures depend on your balance, fund choice, and whether you use an adviser. Always request a fee disclosure document from the provider before committing.
| Provider | Platform Type | Typical Annual Fee Range | Fund Menu | Offshore Access | Shari’ah Funds |
|---|---|---|---|---|---|
| Allan Gray | Linked living annuity | 0.25% to 1.0% (platform + funds, varies by balance) | Allan Gray funds plus selected external funds | Limited; through fund-of-funds | Yes (Orbis Islamic via Allan Gray) |
| Old Mutual | Linked living annuity | Varies; see provider | Very broad: internal and external fund managers | Yes | Yes |
| Glacier (Sanlam) | Linked living annuity | Varies; see provider | Very broad fund universe | Yes | Yes (27four and others) |
| Liberty | Linked living annuity | Varies; see provider | Multiple fund managers | Yes | Yes |
| 10X Investments | Low-cost passive platform | Low; see provider for current schedule | Predominantly passive/index funds | Limited | No (at time of writing) |
| Fedgroup | Specialist structure | Varies | Specialist and impact investing options | Limited | No |
For living annuities held on platforms that allow offshore exposure, offshore investing from a South African retirement portfolio explains how rand hedge exposure can add resilience to a retirement income portfolio, particularly given rand volatility over time.
Why Your Drawdown Rate Matters More Than Your Provider Choice
The single variable with the most power over whether your living annuity lasts your lifetime is how much you withdraw each year, not which company’s logo appears on your policy document.
Professional convention holds that a drawdown rate of 4% to 5% per year gives a balanced portfolio a reasonable chance of sustaining income for 25 to 30 years, depending on investment returns and inflation. Draw at 7% or above, and the probability of running out of capital before you die rises sharply, especially in the first decade of retirement when sequence-of-return risk is highest.
Consider an illustrative example. A retiree with R1,000,000 in a living annuity drawing at 5% takes R50,000 per year, or roughly R4,167 per month before tax. If the portfolio earns 8% and inflation runs at 5%, a real return of approximately 3% means the capital has some capacity to sustain that drawdown over 20 to 25 years, though nothing is guaranteed.
Now consider someone retiring at 60 with R500,000. This is a question many readers ask, and the honest answer requires directness. At a 5% drawdown rate, R500,000 produces R25,000 per year before tax, or just over R2,000 per month. That is a very limited income by most South African cost-of-living standards. Combining it with other income sources, including a spouse’s pension, part-time work, or eventual SASSA old age grant eligibility at age 60, becomes almost essential. A living annuity is still a valid structure at this balance, but the sustainability challenge is real and should not be minimised.
Drawing at 10% or more to make the monthly number feel more comfortable accelerates capital erosion. Many retirees who start high cannot reduce their drawdown later without a painful income cut.
The interaction between inflation and your drawdown rate compounds over time. If you do not increase your income annually to keep pace with inflation, your real purchasing power erodes steadily. If you do increase it, your capital depletes faster. This tension is built into the product. Use a retirement planning tool to model your income under different return and inflation assumptions before settling on a drawdown rate. For the full picture on how inflation erodes retirement income over time, that article works through the numbers in detail.
For guidance on choosing a specific rate that fits your balance and time horizon, how to choose a sustainable drawdown rate is worth reading alongside this one.
Tax on Living Annuity Income in South Africa
Income drawn from a living annuity is treated as normal income for tax purposes in South Africa. It is not exempt, not treated as capital, and not taxed at a preferential rate. SARS taxes it at your marginal rate, the same way a salary is taxed.
This is a point that retirees often misunderstand when comparing a living annuity to a life annuity. Both are taxed identically in the drawdown phase. The tax advantage you received was during the savings phase, through your retirement annuity or pension fund contributions, which were deductible up to the SARS limits. By the time you are drawing an income, that advantage has been used.
For the 2025/2026 tax year, SARS published the following income tax thresholds (verify these with SARS or your adviser, as thresholds are updated annually):
- Below age 65: Tax threshold at R95,750 per year
- Age 65 to 74: Tax threshold at R148,217 per year
- Age 75 and older: Tax threshold at R165,689 per year
This means that if your living annuity income falls below the applicable threshold for your age group, you pay no income tax. For many retirees with smaller balances, this is useful planning information, not a loophole, just the ordinary application of the tax tables.
The distinction between the savings phase and the income phase is worth being precise about. Contributions to a retirement annuity reduce your taxable income during your working years, up to 27.5% of taxable income or remuneration (whichever is greater), capped at R350,000 per year. Once you retire and convert to a living annuity, no further contributions occur, and the tax deduction no longer applies. What applies instead is the ordinary income tax treatment described above.
For changes that affect this picture in 2026, the 2026 Budget changes affecting retirement income and tax article covers the relevant updates. If you want to model your specific tax position, working with a financial adviser on retirement tax planning is the most reliable route.
Living Annuity or Life Annuity: Which Is Right for You?
The choice between a living annuity and a life annuity is one of the most consequential decisions you make at retirement, and it is permanent for a life annuity. Understanding the structural difference matters.
Living annuity:
- You remain invested; your capital can grow or fall
- You choose your drawdown rate between 2.5% and 17.5% per year
- Your balance passes to your beneficiaries on death
- You carry the investment risk and longevity risk
- Income is not guaranteed; it depends on portfolio performance and drawdown choices
- Suitable if you have enough capital to sustain a low drawdown rate, or if estate planning matters to you
Life annuity:
- You hand your capital to an insurer in exchange for a guaranteed income for life
- No balance passes to beneficiaries (unless a guaranteed term applies)
- The insurer carries the investment risk and longevity risk
- Income is contractually guaranteed, regardless of how long you live
- Suitable if you prioritise certainty of income and are less concerned about leaving capital behind
A blended approach, holding a life annuity for guaranteed base income alongside a living annuity for flexible drawdown, is a strategy that many financial planners use in practice. It is not a novel idea; it reflects the reality that pure certainty and pure flexibility are both suboptimal at the extremes.
On the emigration question: if you permanently relocate outside South Africa, you cannot simply cash in a living annuity. The proceeds remain locked in the South African retirement system and must continue to be drawn as income within the SARS rules. The tax treatment changes based on your residency status, and this requires specialist advice. For a full treatment of this scenario, living annuity versus life annuity for South Africans living abroad covers the considerations in detail.
How to Evaluate a Living Annuity Before You Commit
Evaluating a living annuity correctly means moving past performance rankings, because past fund performance does not reliably predict future returns. What you can assess objectively is structure, cost, and fit.
Use this checklist when comparing options:
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Total cost of ownership. Add the platform administration fee, the fund management fee (TER), and any adviser fee. The total is your hurdle rate. Your portfolio must beat that cost before you see a real return.
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Fund menu breadth. Can you access equity funds, balanced funds, income funds, offshore funds, and Shari’ah compliant options if needed? A restricted menu limits your ability to adjust allocation over time.
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Offshore exposure. Does the platform allow you to hold a portion of assets in foreign currency? Rand depreciation over time is a real risk to purchasing power in retirement.
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Flexibility on drawdown. Can you adjust your drawdown rate annually? Most living annuities allow one adjustment per year. Confirm the mechanics and any restrictions.
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Beneficiary nomination process. How straightforward is the nomination and update process? Clear processes matter for estate planning purposes.
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Platform stability and administration quality. Administration errors on living annuities cause real harm. Look for providers with a track record of accurate and timely processing.
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Shari’ah compliance. If this is a requirement, confirm both the fund-level compliance and whether the platform structure itself meets your criteria.
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Adviser independence. Are you receiving advice from someone who has access to the full market, or only to one provider’s products? This affects which options you are shown.
Performance tables published by fund ratings services are useful for understanding historical fund behaviour, but they are not a reliable guide to which platform to choose. The platform choice is an administrative decision. The fund choice is the investment decision. Keep the two separate in your thinking. For help with the advisory relationship, finding an independent financial adviser for retirement covers what to look for.
Frequently Asked Questions About Living Annuities in South Africa
These are the questions South African readers ask most often about living annuities. The answers below are general information and are not personal financial advice.
Q: Which annuity provider offers the highest payouts? A: No provider consistently offers the highest payouts, because living annuity income is determined by your drawdown rate and your portfolio’s performance, not by the insurer. For a life annuity, payout rates vary by age, gender, and prevailing interest rates at the time of purchase; getting multiple quotes from different insurers before committing is essential.
Q: Can someone retire at age 60 with R500,000 in savings? A: Technically yes, but the income will be very limited. At a 5% drawdown rate, R500,000 generates R25,000 per year before tax, roughly R2,000 per month. Supplementing this with other income sources or continuing to work part-time is worth serious consideration. For detailed guidance, read living annuity drawdown rates explained.
Q: Whether a living annuity represents a sound investment choice? A: A living annuity is a sound structure if your drawdown rate is sustainable and your portfolio is appropriately diversified. It is not inherently good or bad. The outcome depends almost entirely on the choices you make within it, particularly how much you draw each year.
Q: Which retirement annuity is most suitable in South Africa? A: Note the distinction: a retirement annuity is a savings vehicle used before retirement, while a living annuity is a drawdown vehicle used after retirement. For the savings phase, the most suitable retirement annuity is usually the one with the lowest total cost and the broadest fund menu for your circumstances. Low-cost passive options from providers like 10X and Sygnia are worth comparing against actively managed alternatives.
Q: How do living annuities function in South Africa? A: You invest your retirement capital into a living annuity, select underlying investment funds, and draw an income between 2.5% and 17.5% of your capital per year. The remaining balance stays invested, can grow or fall with markets, and passes to your nominated beneficiaries on death. You carry all investment and longevity risk.
Q: What are current annuity rates offered in South Africa? A: For life annuities, rates change regularly based on long-term interest rates and the insurer’s pricing model. Request current quotes from at least three providers before purchasing. For living annuities, there is no “rate” in the traditional sense; your income depends on how much you draw from your invested portfolio.
Q: How to access a retirement annuity after permanent relocation outside South Africa? A: You cannot simply withdraw the full balance on emigration. Under current legislation, your retirement savings remain within the South African system. If you have formally completed the financial emigration process (now governed by tax residency rules), you may be able to access certain funds after a waiting period. This area is complex and changes with legislation; specialist tax and financial advice is essential.
Q: What tax implications apply to retirement annuities in South Africa? A: During the savings phase, contributions to a retirement annuity are tax-deductible up to prescribed limits. At retirement, you may take a portion as a lump sum (taxed using the retirement lump sum tax table), and the remainder converts to annuity income, which is taxed as ordinary income at your marginal rate.
Q: How much can contributions to retirement annuities reduce taxable income? A: SARS allows a deduction of up to 27.5% of the higher of taxable income or remuneration, capped at R350,000 per year. Contributions above this limit can be carried forward and deducted in future tax years.
Q: Which annuity option is most cost-effective in South Africa? A: Cost-effectiveness depends on your balance, adviser arrangement, and fund selection. As a general rule, passive index fund options on low-cost platforms (such as 10X or Sygnia) tend to have lower total fee loads than actively managed alternatives. A lower fee does not always mean a better outcome; it depends on what you get for the cost.
Q: How to compare different retirement annuity products available? A: Compare total cost (platform fee plus fund TER plus adviser fee), fund menu breadth, platform flexibility, and the quality of administration. Do not compare based on past performance alone. Ask each provider for a full fee disclosure document.
Q: What distinguishes a living annuity from other annuity types? A: A living annuity keeps you invested; your income is flexible, your capital can grow or fall, and your balance passes to your beneficiaries. A life annuity guarantees income for life but returns no capital on death. A retirement annuity is not an income product at all; it is a savings structure used during your working years. These three products serve different purposes and operate differently.
The Bottom Line on Living Annuities in South Africa
The best performing living annuity in South Africa is not determined by provider branding; it is determined by three core decisions you make: which funds you invest in, how much you draw each year, and what you pay in total fees. Getting all three right matters far more than picking any particular platform name.
To summarise the key points:
First, choose funds deliberately. Your portfolio needs to earn enough, after fees and inflation, to sustain your chosen drawdown rate for potentially 25 to 30 years. A mix of growth assets and income assets is usually appropriate, adjusted for your age and risk tolerance.
Second, set a sustainable drawdown rate. Professional convention generally points to 4% to 5% as a starting range for a balanced portfolio with a long retirement horizon. Drawing above 7% from the outset carries meaningful risk of capital exhaustion. If you are retiring with a smaller balance, such as R500,000, be honest about what the numbers produce and plan accordingly.
Third, manage costs. Every percentage point in annual fees is a percentage point your portfolio must earn before you see a real return. Over 20 years, the difference between a 0.5% and a 1.5% annual cost can be very large in rand terms.
Living annuities suit retirees who want investment flexibility, the ability to leave capital to beneficiaries, and the capacity to manage their own drawdown decisions over time. They are not suitable as a set-and-forget product. They require annual review.
Use the retirement planning tool to model your income under different return and drawdown scenarios before you commit to a strategy. If you are unsure where to start, how to find a financial adviser for retirement planning will guide you on finding the right person to help you work through these decisions.
This article is general information only and does not constitute personal financial advice. Every person’s retirement circumstances are different. Please consult a qualified financial adviser before making any decisions about your retirement income.