Chances are when you first started saving for your retirement, you did so thinking you would be retiring in South Africa. Life is what happens when we’re busy making other plans, and you’re probably wondering what to do with your South African retirement savings if you’ve emigrated, or you’re in the process of packing up and relocating. Let’s take a look at your options after emigration when it comes to your retirement savings.
What are my options?
Can you transfer your retirement annuity to another country?
Unfortunately, there’s no such thing as a simple lift-and-shift transfer when it comes to retirement savings. You can either keep contributing locally, or you can make your policies paid up. You will need to cash in your funds as a lump sum which you can then transfer abroad and invest in a new retirement savings vehicle if you choose.
Can you cash in your retirement savings in South Africa?
Before March 2021, to access your savings in a retirement annuity it was necessary to have your emigration recognised and formalised by the South African Reserve Bank, for exchange control purposes. After March 2022, if you want to cash in your retirement annuity after emigration you will need to show that you have been a tax non-resident of South Africa for at least three years before access to your funds will be permitted. In other words, you will need to have ceased your South African tax residency.
Similarly, where you belong to a preservation fund and have used your one pre-55 withdrawal you must have been a non-resident for South African tax purposes for no less than three unbroken years in order to access the remainder of your retirement funds after your emigration.
How to access your retirement savings after emigration
From 1 March 2021, the definitions of ‘pension preservation fund’, ‘provident preservation fund’, and ‘retirement annuity fund’ were expanded to allow members who have ceased to be resident for an unbroken period of not less than three years to cash in the full benefit, but only if they have not yet retired or reached the age of 55.
Furthermore, members of a pension preservation fund or a provident preservation fund who have utilised their one pre-55 withdrawal may also withdraw their benefit in full after ceasing South African tax residence and maintaining their non-resident status for no less than three uninterrupted years.
Read: Pension, provident, and preservation funds: What’s the difference?
It is important to note that you can only cash in your retirement savings after emigration if you are under the age of 55 and you have not yet elected to retire.
In order to access your retirement funds, it will be necessary to get your tax ducks in a row. SARS is going to want to tax your withdrawal according to their special retirement lump sum tax table.
You will then need to complete tax emigration, which will require you to show that you no longer meet the requirements for tax residency. You will need to notify the South African Revenue Service (SARS) that you have ceased to be a tax resident (via eFiling, usually) and once you have become a non-resident for tax purposes, you will be eligible to start the process of withdrawing your retirement savings from South Africa. After you’ve maintained your non-resident status for a minimum of three years, of course.
Your Fund Administrator will need to submit a tax directive application through eFiling on Form B or Form C and the following documents will be required by SARS:
- Certificate of residence not older than 6 months issued by the Tax Authority of the country of residence.
- Documentation confirming cessation of residence:
- The fund administrator must verify that you have not been a tax resident for a minimum period of three years.
- The documents that may be accepted by the Fund as verification include passports indicating exit dates from South Africa and entry into the resident country, as well as tax assessments issued in the country of residence.
- As a taxpayer, you must inform SARS as soon as you cease to be a tax resident so that the SARS system can be updated accordingly. Without having informed SARS that you ceased to be a tax resident, your application will be rejected.
When does the three-year period start?
The three-year period starts when you inform SARS that you have ceased to be a tax resident, which should be done in the year that you become a tax non-resident. If you have recently left, you can inform SARS by ticking the appropriate box when submitting your normal income tax return or you can use a Declaration of Cease to be a Tax Resident, where you left some time ago. In this regard, it is important to note that the three-year rule works retrospectively. This means that it can be applied before 1 March 2021, so that if you moved two years ago, you would only need to wait another year before you are eligible to move your retirement savings out of South Africa.
FinGlobal: retirement annuity encashment specialists
Whether you’re still planning to emigrate, or you left the country many years ago, we can help you get your hands on any retirement policies remaining in South Africa. From start to finish, FinGlobal can handle all your cross-border financial requirements.
Please request your free financial report today
To provide you with accurate, objective advice, our consultants will need to gather information from your insurers and SARS. This feedback is then presented to you in a financial report that shows your actual surrender values, your general policy information and provides a basic tax calculation, so you know what you’re in for. This report then forms the basis of your financial consultations with us, moving forward.
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