Prudential Investment Managers

Prudential Investment Managers

June 2020

Amended regulations for living annuity investors

The Coronavirus pandemic and subsequent measures to contain the outbreak has had a devastating impact on financial markets and the economy. Many South Africans have been left facing unexpected cash-flow problems as a result, which has been especially challenging for living annuity investors who are unable to increase their annuity income outside of their policy’s annual anniversary period. Another challenge facing living annuity investors has been the sharp sell-off of asset classes over the past three months, which in turn has negatively impacted the values of their investments. This has been compounded by the “locking in of losses” through the sale of assets at lower market prices to fund their annuity income.


In a bid to provide some relief to those most impacted financially by the Coronavirus pandemic, the government has amended the applicable regulations by expanding the current drawdown rates and allowing living annuity investors the opportunity to amend their annuity income percentage outside of their anniversary period. In addition, living annuity investors who have a policy value of R125 000 or less will also be able to withdraw the full amount as a cash lump sum. Each of these changes are discussed in more detail below.

New temporary annuity drawdown rates

Effective immediately, all living annuity investors will be able to either increase or decrease their annuity income rate to between 0.5% - 20% p.a. for a limited period of four months (from 1 June 2020 to 30 September 2020). Thereafter, we will automatically revert their income percentages back to their original rate within the standard 2.5% - 17.5% p.a. range.

New investors who are scheduled to receive their first income payment before 30 September 2020, as well as those who are currently within their anniversary review period, will also be able to choose a specific income amount within the 0.5% - 20% p.a. range for the period to 30 September 2020. However, they will also need to provide us with a second income rate (between the 2.5% - 17.5% p.a. range), which we will then apply after the relief period has lapsed.

New minimum value for lump sum cash withdrawals

Living annuity investors who have a policy value of R125 000 or less will be able to withdraw the full amount as a cash lump sum. Previously, this option was only available to investors who had a minimum value of R50 000 (in the event that a lump sum was taken at retirement) or R75 000 (where the full retirement benefit was used to purchase the living annuity). These amendments are not limited to the four-month restriction period highlighted above and will replace the existing minimum threshold amounts within the Prudential Living Annuity with immediate effect.

How to temporarily change your living annuity income percentage

If you would like to change your annuity income percentage for the period 1 June 2020 to 30 September 2020, you will need to download and complete the Prudential Living Annuity Revised Income Request form and send it to before 22 June 2020 in order for payment to be made by 24 June 2020. The form also includes an annexure of “frequently asked questions” relating to the new income rates, which we encourage you to familiarise yourself with before submitting your instructions.

In conclusion, we would like to reassure you that we are continuing to do all we can to safeguard your portfolios during these uncertain times, while positioning them as advantageously as possible for what we know will be tough conditions ahead. The pandemic has been hard-felt for many South Africans, and we look forward to gradually being able to emerge from this strict lockdown in the coming weeks, so that we can go back to work and the economy can restart.

For more information please speak to your financial adviser or contact our Client Services Team on 0860 105 77 or email us at


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