Emigration and subsequent access to your retirement funds

As an emigrant, accessing your retirement funds (pension preservation funds, provident preservation funds and retirement annuities) will be more challenging from 2021 onwards.

A change with regard to the rules around financial emigration and accessing your retirement funds comes into effect from 1 March 2021.

This change restricts South Africans who have financially emigrated from withdrawing their retirement funds until 3 consecutive years have passed. After this 3-year period, an individual will need to prove that they are a non-SA resident for tax and exchange control purposes.

What are your options?

Early withdrawals (prior to age 55)

  • Pension preservation fund / provident preservation fund members (with no prior withdrawals) will still be granted access to their retirement benefits and can transfer the funds abroad.
  • Retirement annuity members wanting to access their funds will need to financially emigrate before transferring the funds abroad. If not completed before 1 March 2021, their retirement fund will possibly need to remain invested in South Africa for at least 3 years.

Retirement (from age 55):

  • Provident preservation fund members will be granted access to their full benefit, which can be taken abroad.
  • Pension preservation fund / retirement annuity members can access up to one-third of the capital, which can be taken abroad. Members wanting to access the full benefit will need to emigrate financially. On emigration, the benefit will be subject to a higher tax rate. If not done before 1 March 2021, their retirement fund will possibly need to remain invested in South Africa for at least 3 years.

In summary

The new amendment comes into effect within the next few weeks. Those who have left their retirement funds in South Africa will need to evaluate the tax implications of expatriating their funds as soon as possible or retiring in rands.

Morné Bezuidenhout       BCom LLB CFP®

If you are considering financial emigration, we recommend consulting an emigration specialist as soon as possible to finalise this process. National Treasury has stated that complete emigration applications submitted before 1 March 2021 will be finalised through the current process.

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