You should think carefully when changing or switching from one financial solution to another, but there are sometimes instances when it makes sense to do so, says Sanlam financial adviser Danie van Niekerk from Indwe Bluestar.
  
Traditional retirement annuities (RA) may limit your options when it comes to protecting your retirement investments against market downturns, because there may not be much flexibility to change the underlying investment options.
  
It’s understandable that people are cautious about switching out of their legacy RAs because of early termination penalties. However, if you switch from a traditional RA to a new generation Retirement Annuity Plan, no termination charges may apply and you should have no concerns about losing any portion of your retirement savings. This depends from product to product provider and fine print needs to be investigated to see the underlying terms and conditions.
  
When you convert to the Sanlam Cumulus Echo RA, the entire fund value of your existing RA is transferred – free of any early termination charge or transaction fees, depending of your old solution.
  
All things being equal, your retirement proceeds on the converted plan will be the same as or better than the proceeds of the old RA.
  
Danie from Indwe Bluestar also says when you convert to a new RA, it is important to ensure that you are not worse off. You therefore need to look at the total impact of all the fees on the growth of your RA.
  
The reason for the transfer should be because the overall fees or investment choices on the new plan are better. Fortunately, the Cumulus Echo Retirement Plan offers this and it offers unique additional benefits such as the Echo Bonus.
  
Before taking the decision to convert, you should consult your financial adviser to find out if you would forfeit any benefits and guarantees on your traditional RA. This will also help you to establish if the conversion is the most cost-effective decision for you or not.