February is a good time to re-assess the tax savings you can achieve from contributing to a retirement fund.
You may want to check whether you can save by topping up your retirement savings before the tax year ends on February 28, or after this week's budget you might want to check what you should contribute for the new tax year starting on March 1.
If you decide to contribute more to your retirement fund, and you are employed, you should begin by finding out whether you can contribute to your employer-sponsored fund as sometimes the fees are lower than on a fund you can access as an individual through a financial institution.
However, if you complement your employer-sponsored retirement savings or you are forced to save into a retirement annuity (RA) because you are self-employed, the choice of products is wide and confusing. Asking the right questions can help narrow the field.
Is it a policy with terms and penalties?
Is the RA "wrapped" as a life assurance policy with contractual terms that stipulate you must make a regular contribution for a specified term with set increases each year where you could be penalised, or is it one without these constraints?
While a contract can help you be disciplined about saving, should some financial crisis arise — such as losing your job — breaking the contract by stopping or reducing your contributions could result in the life company imposing certain penalties.
You do not need to agree to the terms that come with some RAs, however. So-called new generation RAs offered by some investment platforms and unit trust companies have none of these terms, allowing you to sign up for a regular contribution but stop or reduce that contribution should you need to, at any time...