Why retirement annuity investors should ignore market headlines

The uncomfortable truth about retirement in South Africa - Rands and Sense by 10X [video]

We sit down with 10X Investment Consultant lead Andre Tuck and discuss the retirement savings crisis in South Africa. We also delve into living annuities, retirement annuities, TFSAs and everything in between. Read more

Financial headlines and news are everywhere, and it is hard to ignore as an investor, but this information should ideally not affect your decision-making when it comes to your retirement annuity. News headlines are often structured to grab your attention, and these articles can often cause anxiety among investors.

This may lead you to feel you should react to this information and make changes to your retirement annuity accordingly. However, oftentimes, this is not necessarily the case. Retirement annuities are long-term investment vehicles designed for long-term investing, including during periods of market volatility. In this article, we will take a closer look at how ignoring market headlines may be the best choice of action in the long term.

What is a retirement annuity?

A retirement annuity (RA) is a long-term retirement investment savings vehicle that offers you some enticing tax deductions as an investor. As of the 1st of March 2026, regulations state that contributions are tax-deductible, up to R430,000 and a maximum of 27.5% of your salary per annum.

You will also notice that all growth within your RA is tax-free, thus allowing for more of your returns to be reinvested and allowed to grow and compound over the long term. At retirement age, which is currently age 55 in South Africa, you will be able to transfer your retirement annuity across to an annuity. This will either be a life or a living annuity that will provide you with an income for the retirement years.

Understanding the Two-Pot Retirement System

The Two-Pot Retirement System was implemented in September 2024 in South Africa. This system has changed the way contributions and withdrawals to and from retirement products, such as retirement annuities, are managed. All contributions to retirement products are now split between two pots, namely: a ‘retirement pot’ and a ‘savings pot’. There is also a third pot, which is called the ‘vested pot’, which remains governed by the old rules.

Withdrawals from the savings pot are allowed, according to the rules in place. You may withdraw once per year, for a minimum amount of R2,000. All withdrawals are taxed at your marginal tax rate, and you will also be charged an admin fee. The savings pot capital should ideally remain invested, and withdrawals should be avoided if possible.

Any contributions to your retirement annuity will be split between the retirement pot and the savings pot. One-third of contributions will be allocated to the savings pot, and two-thirds of contributions will be invested in the retirement pot. The retirement pot can only be accessed upon retirement, when it will then be used to purchase a life or living annuity. Please consult the latest FSCA guidance for the most up-to-date information on the Two-Pot Retirement System.

Why market headlines grab our attention

Market headlines are structured to grab our attention and make us want to read further. As humans and investors, we are wired to seek out threats and uncertainty, which means we are often drawn to market headlines that capitalise on this angle.

Articles often focus on topics related to financial and political uncertainty, market crashes, inflation and any related topics, often negative, that will attract investor interest. After reading these articles, you may feel the need to change your retirement annuity in order to build in some protection against any perceived threats that are being referenced.

The problem with making investment decisions based on headlines

Headlines often focus on the short term or on events that are currently taking place, which may only have a short-term impact, whereas your retirement annuity is a long-term investment that focuses on performing well over an extended period. You may find that your retirement annuity is invested in the market for many decades, and along with this comes a need for consistent contributions and patience.

Both of these will make space for your retirement annuity capital to grow and compound over the long term. As an investor, focusing too much on the short term and short-term market noise may result in your reacting emotionally and making knee-jerk decisions that are unlikely to serve you in the long run. These could include switching out of growth assets and into cash, or trying to time the market. These decisions affect your long-term retirement outcomes and must be carefully considered.

What history tells us about market volatility

If you look back over history, you can see all the setbacks that have occurred over the years. If you think of economic downturns, financial crises, pandemics, wars and the like, there have always been such events, and there will continue to be. Market volatility and reactions to world events are to be expected in investing. It is normal for such events to occur, for the market to take a knock, and for it to recover over time. This is an intrinsic part of the investing journey and should be expected from time to time. It is also important to remember that past results do not guarantee future results, and as an investor, you should be ready for anything, as nothing can be guaranteed.

The behavioural traps created by market headlines

Let’s have a look at some of the behavioural traps that can be created by market headlines and what you need to be aware of as an investor:

• Switching funds across into cash after a market crash: This may result in your losses being locked in when the market does recover.
• Checking your retirement annuity and its performance too often: An annual review of your RA should be sufficient.
• Constantly switching your funds in order to pursue better returns: Funds should align well with your investor profile and long-term financial plan and goals, and you should avoid reacting emotionally.
• Not focusing on your long-term financial plan and goals: As an investor, you should avoid being distracted by short-term noise and volatility.

Your behaviour as an investor and the decisions that you make regarding your retirement annuity can have a big impact on your potential retirement outcomes. H2: Why asset allocation matters more than headlines Asset allocation is a major factor in your retirement annuity that should be carefully considered. Asset allocation plays the biggest role in the performance of your retirement annuity, accounting for over 90% of returns, as seminal research from Brinson, Singer and Beebower shows.

Your asset allocation will consist of a mix of the different asset classes according to your requirements. You will select your asset allocation based on your investor profile and your long-term financial plan and goals. Your investor profile considers your risk tolerance levels as well as your investment timelines. Your asset allocation will include equities, real estate, bonds and cash. 10X gives investors the freedom to adjust the underlying portfolio by choosing from a selection of carefully curated investment funds, each with a different mix of assets and geared towards different investor profiles.

Equities are the most volatile of the asset classes, but they are also likely to generate the best returns in the long term. Equities have historically produced returns above inflation, by around 7% annually over the long term (based on JSE All Share Index performance versus CPI from 1960-2020); however, past performance does not guarantee future results. Real estate may serve as a good hedge against inflation while contributing to long-term portfolio growth. Bonds will add some stability to your portfolio, but they are likely to generate lower returns. This does not mean bonds will never outperform expectations, merely that they are seen as a more conservative option. Cash will generate the lowest returns of all the asset classes while also being the most liquid and stable.

Your portfolio may also be further diversified by including some offshore exposure. This may be a good hedge against local market volatility and any depreciation of the Rand. You will need to consider Regulation 28 of the Pension Funds Act, which limits the amount of equity and offshore exposure that you may have in your portfolio. Current regulations allow a maximum of 75% in equities and 45% offshore. Our funds at 10X are Regulation 28-compliant and well-diversified, offering clients access to a range of asset classes, including offshore exposure. Please explore our funds page for the most up-to-date fund information.

The importance of fees

Fees are an element that should not be ignored. You would look to review your fees annually to ensure that the fees that you are paying are not excessive. Higher fees may result in there being fewer returns available to reinvest in your RA, compared to lower fees, which may mean that there are more returns to reinvest and allowed to potentially grow and compound over time. Let’s look at an example to illustrate the effect of fees of 3% versus fees of 1%: We will assume the following information for our example:

• Investment period of 30 years
• Initial lump sum investment of R50,000
• Monthly contributions of R2,000
• Return of 12% per annum
• An inflation rate of 6%

Example 1 (1% Fees): Real investment value is approximately R1.8 million

Example 2 (3% Fees): Real investment value is approximately R1.3 million

As you can see in this example, a small difference in fees can affect your final investment value. In this case, it is a near-40% difference over the investment period. This example is for illustrative purposes only, and real results may vary. You can learn more about how fees impact retirement outcomes here. Here are some examples of the typical fees that you may see:

• Management fees: These will be the fees charged for the running and management of the fund.
• Advisor fees: Your advisor will charge fees for the advice and services that they offer. You may see both an initial fee and an annual fee charged.
• Administration fees: There will be admin tasks related to the fund, which will be charged for. These will be for tasks such as compliance and tax.

Your Effective Annual Cost (EAC) can be found on your investment statement or requested from your service provider. This is a standardised metric introduced by ASISA in 2015. This useful metric will allow you to see all of the fees and costs that are associated with owning an investment product over a one-year period. All else being equal, you may notice that a higher EAC would result in fewer returns available for reinvestment. If you compare this to a lower EAC, there may be more returns available to be reinvested and potentially compound over time.

The EAC should be just one factor to consider when comparing service providers. At 10X, you can expect to find transparent, simple, and low-fee options. The fees that are charged on retirement products are usually 1% or less. This does depend on the product selected and the amount invested. Please explore our products for the most up-to-date fee information. Fee information is correct as of 12 June 2026.

What retirement annuity investors should focus on instead

As an investor, there are some important areas that you should instead direct your attention to. Rather than spending time worrying about market headlines and short-term events that are outside of your control, it is more productive to focus on the factors that can have a meaningful impact on your long-term retirement outcomes. Let’s have a look at some of these areas:

• Long-term financial goals: Your retirement annuity should be aligned with your broader financial plan and retirement objectives. Keeping these goals front of mind can help you stay focused during periods of market uncertainty.
• Fees: Fees should be reviewed annually to ensure that you understand what you are paying and that the fees remain competitive. Lower fees may leave more of your investment returns available for reinvestment and long-term growth.
• Asset allocation: Your asset allocation should be reviewed periodically to make sure that it remains appropriate for your investor profile, risk tolerance, investment timeline, and retirement goals.
• Contributions: Consistent contributions are one of the most effective ways to build retirement capital over time. Where possible, consider increasing your contributions as your income grows. This allows you to take advantage of compound growth and the tax benefits offered by a retirement annuity.
• Investor behaviour: Maintaining discipline during periods of market volatility can be just as important as selecting the right investment strategy. Staying invested, avoiding emotional decisions, and keeping a long-term perspective can potentially improve your retirement outcomes.

Focus on your retirement annuity goals, not the headlines

Your ultimate focus should be your retirement goal and retirement plan. It’s important that your focus is not derailed by market headlines and short-term news events. Headlines mostly focus on the short term and the ‘now’, whereas your retirement annuity is for the long term. Market volatility is normal, and you can expect this as part of the investing journey. It is not worth it to react emotionally to such volatility and noise that you may find detailed in the media. An investor who remains focused on the future and their long-term goals and plans may be in the best position over time. As an investor, it’s key that you have a long-term plan in place in order to help you drown out market noise and to keep you focused. Get in touch with the experienced and knowledgeable 10X investment consultants if you have any queries or would like to learn more about the 10X Retirement Annuity.