A recent article in Finweek (It’s derby time, 22 March 2012) likened the debates on active versus passive investing, retirement annuities versus unit trusts and fees versus commissions, to a football derby. But football derbies are highly emotional affairs, reflecting our individual, and often irrational, loyalties. In contrast, all retirement investors essentially have the same objective: to secure a pension that will preserve their standard of living through-out retirement. The universal question: what is the surest and safest way to get there? Unlike football results, savings outcomes do matter, and they do have life-long consequences. Finding the optimal answer must therefore be a dispassionate and goal driven process that does not give room to emotional arguments.

The 2011 budget speech proposed some radical retirement reforms (in the context of an otherwise fairly stable environment), subject to industry comment. This year’s speech confirmed many of these proposals, cleared up ambiguous matters and, encouragingly, also addressed some of our specific concerns. There were also unexpected tax rate developments and a strong message to the financial sector to clean up its act.

In the excitement of staring a new job, you may lose sight of the impact this may have on your current pension arrangements. You may be forced to terminate your existing arrangements, or transfer to another fund, and you potentially face the loss of tax breaks and even a large chunk of your accumulated RA savings. In this article we spell out the consequences and your options.

Which fund type works best for you? How do you get paid out and what are the the tax consequences? We answer frequent questions on retirement funds.

A recent article argues that low-income investors may be better off saving outside a retirement fund or not claiming the available tax deductions on contributions. But the reasoning is flawed, and the conclusions drawn very wrong.