Retirement Funds

What you need to know if you are a South African abroad struggling to access your SA retirement funds. Image: AdobeStock

Retirement Funds: How to access your South African funds if you are Abroad

The withdrawal of South African (SA) preservation or retirement annuity funds, as well as the challenges associated with the process, has become a hot topic in the South African expat community in recent months.

Retirement Funds

What you need to know if you are a South African abroad struggling to access your SA retirement funds. Image: AdobeStock

Many South African expats have been unable to access their retirement funds due to a combination of incorrect advice and/or a lack of information on the specific requirements. It is critical that the following requirements be met for a successful outcome

1. Tax Compliance

If you are thinking about withdrawing your SA retirement funds, the first step is to make sure your tax affairs and tax residence status with the South African Revenue Services (SARS) are in order and compliant. Inactive tax numbers, outstanding tax returns, SARS penalties, and general non-compliance will halt the process. Ascertain that you have an active tax number with SARS, a compliant tax profile and that all tax return submissions have been correctly and successfully submitted. If your tax profile is not up to date nor compliant it is advisable to first seek advice from a SARS tax practitioner to mitigate any further risk. 

2. Ceasing Tax Residency through the Tax Emigration Process

The Income Tax Act makes provision for the early encashment of a taxpayer’s retirement annuity or preservation funds. The encashment is subject to the requirement that the taxpayer needs to be a non-resident for tax purposes for a minimum of three consecutive years at the time of the withdrawal request.

The non-resident status is achieved through the Tax Emigration process that involves obtaining an emigration tax clearance pin as well as a notice of non-resident tax status letter from SARS. These documents can only be obtained if it is proven to SARS that the taxpayer no longer meets the South African residence tests, and they are then used to verify to third parties that the taxpayer is indeed compliant and a non-resident for tax purposes to allow the successful withdrawal of their retirement funds.

The Tax Emigration process is not as simple as it might seem, it includes various tax law requirements, an exit tax component, declaration of all worldwide assets and supporting documentation to SARS.

ALSO READ: South Africans Abroad: Is your South African Tax Status Correctly Noted?

3. Non-Resident South African Bank Account

The last hurdle involves the receipt of the policy funds into a non-resident SA bank account. Many South Africans have moved abroad but have failed to convert their current SA resident bank account/s to non-resident upon departure. This has become increasingly difficult, especially because being a non-resident involves being abroad permanently and it makes it impossible to visit a branch in South Africa.

If you have a South African private banker, then it is advisable to ask them for assistance with this step alternatively, there are many reputable firms that specialise in non-resident bank accounts for South African expats.

Contact Leap Group to help you with your Retirement Fund

Accessing your preservation or retirement annuity funds in South Africa has become a more difficult and complicated process for South Africans living abroad. Due to the complexities of this process, it is beneficial to work with a firm that offers a unified solution to all requirements. Contact Leap Group if you are abroad and need assistance with your Retirement fund.