Top 3 Cost-Effective Retirement Plans in South Africa. A retirement annuity (RA) is a type of investment product where individuals contribute monthly cash payments to ensure a regular income after retirement. Unlike a Life Insurance policy, which provides financial stability for a family after the insured breadwinner dies, the savings from a retirement plan benefits the member of the annuity when they withdraw from an active working life one day. In essence, it is a tax-efficient investment that allows the member to live comfortably in their senior years. It\u2019s worth noting that the South African Revenue Service (SARS) has amended the retirement fund tax laws, which came into effect on 1 March 2016. Investors contributing to an RA are now eligible for a tax deduction of up to 27,5% of their taxable income (to a maximum of R350,000 per year), taking into consideration the total of contributions you made to the funds for the year. Like any major financial decision, it is imperative that investors do their homework in terms of the type of plan and RA provider they choose. Not carefully weighing the options before deciding can have a significant impact on their returns, therefore it\u2019s important to consult with a financial advisor before moving forward. Investors need to be especially vigilant about the cost of managing their retirement annuity. \u201cGiven the dramatic long-term impact of fees, you should ideally pay less than 1% per annum for these services. Many RAs (especially the underwritten ones) can cost more than three times the low-cost alternative. Over a forty-year savings term, lower fees could double your pension,\u201d advises Tracy Jensen, Chief Product Architect at 10X. Why you should contribute to a retirement annuity? Statistics released by the Reserve Bank\u00a0in 2015 indicate that South Africans are not very good at saving. Back then, South Africa could only manage to save 15.4% of its GDP in the form of pension contributions and other investments. As it currently stands, there has not been much improvement in the uptake of long-term savings. According to the\u00a02017 Old Mutual\u2019s Savings and Investment Monitor, around 30% of those polled in the study, belong to a retirement annuity. Another study, the\u00a0Momentum\/Unisa Household Financial Wellness Index 2017, has uncovered that only 24.2% of financially well off individuals agree that they are able to make provision for retirement. As medical treatments and public health consciousness continue to improve,\u00a0people are now living longer\u00a0and thus require more savings to, amongst others: \tSecure a comfortable living standard in their senior years \tCover any unforeseen expenses in retirement \tLessen their dependence on family and social grants \tSupplement their pension fund \tEnjoy tax free investment\u00a0returns and lump sums With the\u00a0new tax legislation outlined on SARS\u2019 website, investors may upon retirement withdraw one third of their savings as a lump sum.\u00a0 Any lump sum withdrawn at retirement above a minimum threshold (currently R25 000) is subject to tax. The remaining two thirds of the retirement annuity is received in the form of an annuity (regular pension). If the income from your annuity exceeds the tax threshold, tax is payable on the amount. It\u2019s up to the investor to choose a provider and retirement plan that suits their needs, however, as noted above, the lower your investment fees the higher your gains could be. Using the industry\u2019s Effective Annual Cost (EAC) standard, which requires complete disclosure of fees related to investments,\u00a0Moneyweb\u00a0was able to compile a list of the most cost-effective retirement plans in South Africa.