A retirement annuity (commonly called an RA) were introduced in 1960 to give the self-employed the same tax incentives to save for retirement as those people who were members of pension funds. However, RAs can also be used, within certain limits, by people who are already on retirement funds and have not reached their maximum tax benefits on contributions, or have other income outside their "pensionable salary".

You do not pay tax on money you earn that goes toward an RA. You defer payment of the tax until you retire. When you retire, the proceeds are then subject to tax, in most cases at a more beneficial average rate and with fixed minimum exemptions.

The earlier you start a retirement annuity (RA) the better, particularly if you are not a member of a retirement fund.

If you would like to increase your income at retirement while at the same time lowering your taxes now, then consider participating in a tax deferred annuity plan.

A tax-deferred annuity allow you to put a portion of your before-tax wages into an investment account on a regular basis. Instead of paying taxes on the money now (when your tax rate is high), you pay after you retire (when your tax rate will be lower). In the mean time, the annuity account earns dividends that permit you to supplement your retirement income.

As a full-time employee, you are eligible to participate in the Tax-Deferred Annuity Plan. Of course, the plan is voluntary. You may begin participating on the first day of the month following your employment, and you may stop participating at any time.

On your annuity application you can allocate your premiums among several options, such as stocks, money markets, bonds, and world equities. A typical allocation might be similar to the following: stock (30%); money market (25%); bondd market (25%); world equities (15%); other (5%).