South Africa

Have you left South Africa? Here’s a guide to withdrawing your RA in 2022: Image: Adobe stock

Have you left South Africa? Here’s a guide to withdrawing your RA in 2022

Expat South Africans can only be permitted to obtain and transfer their retirement annuities overseas provided they can show that they have not been tax residents of South Africa for at least three years. Here’s a step-by-step guide to the encashment process.

South Africa

Have you left South Africa? Here’s a guide to withdrawing your RA in 2022: Image: Adobe stock

Retirement annuities explained

A retirement annuity (RA) is a tax-advantaged investment made by an individual instead of or in addition to their employer’s pension or provident fund. Retirement annuities, unlike pension funds and provident funds, are not tied to a single employer or work status. As a result, employees who contribute to a workplace provident or pension fund can supplement their retirement savings with an RA and individuals without access to group retirement benefits can use an RA as their primary retirement savings fund.

In South Africa, the Pension Funds Act, which oversees RAs, ensures that funds are correctly managed and risk levels are controlled. Access to funds is also closely regulated by the act.

The maximum amount you can contribute to your RA is 27.5% of your gross income, with a maximum contribution of R350 000 per year.

An RA guarantees recipients a monthly or annual lifetime income. These annuities are frequently funded years in advance, either in a single sum or in a series of recurring instalments, and they can offer either fixed or variable cash flows thereafter.

You may only access the funds inside your RA once you are 55 years old (at retirement age). The only exceptions are if:

  • The fund value is less than R15 000
  • You become permanently disabled
  • You have been a non-resident for South African tax purposes for a period of three consecutive years

 If you intend to leave South Africa, you should be aware of the implications for your retirement pension.

It’s important to note that once a fund has been retired from and converted into a living annuity, you cannot use tax emigration to encash the balance of your funds.

Steps for withdrawing your South African retirement annuity abroad

If you wish to move your RA abroad, you need to liquidate or encash it first. This can be a very lengthy and complex process. When leaving South Africa, you must complete the following steps:

  1. Inform SARS that you are no longer tax resident
  2. Submit a calculation of deemed Capital Gains Tax
  3. Commence the auditing process
  4. Hold your non-tax residency status over three consecutive years.
  5. Obtain emigration tax clearance status (TCS)
  6. Submit your RA withdrawal documentation
  7. Await tax directive from SARS
  8. Transfer RA funds abroad

Inform SARS that you are no longer tax resident

Previously, South Africans living abroad could go through the South African Reserve Bank (SARB) to successfully complete the formal financial emigration process and get instant access to their Retirement Annuity withdrawal benefit.

From March 2021 onwards, tax emigration through the South African Revenue Service (SARS) is the only way to become eligible for early Retirement Annuity release, excluding the above mentioned exceptions. Tax emigration is the process of changing your tax residency status with SARS to non-resident. When tax emigrating, you will need to apply for a letter confirming non-tax residence in South Africa.

In most cases, you will need to file a tax return in the year you cease to be a resident, but you may be able to backdate it by filing a specific application. Currently, you will be able to confirm that SARS has accepted this when they have issued the letter confirming non-tax residence.

Submit a calculation of deemed Capital Gains Tax

You are responsible for Capital Gains Tax or an “exit tax” on worldwide assets as soon as you cease to be a tax resident. This is applicable for all taxpayers but of significant risk to higher net worth applicants who have significant assets that they do not sell at the date of leaving SA. For example a local share portfolio and an overseas property

Commence the auditing process

SARS auditors will manually review your information as part of the non-residency approval process.

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Hold your non-tax residency status over three consecutive years

According to the three-year rule, RA fund members who emigrate must wait at least three years before receiving their pre-retirement lump-sum payouts. This demonstrates that they have a resident taxpayer in a foreign jurisdiction for three consecutive years.

If your tax residency was terminated more than three years ago, you can begin the RA encashment process right away. Otherwise, you’ll have to wait three years before you can access your RA.

This has generated some confusion because some people believe they must wait three years from the regulation changes in March 2021. This, however, is not the case.

Be aware however that if you move between tax jurisdictions this could complicate the proving of three consecutive tax years of being non-tax resident.

Obtain emigration tax clearance status (TCS)

To transfer funds abroad, you will need to verify your tax compliance status as well as the source of the funds.

The TCS system, which was implemented in 2015, allows taxpayers to monitor their compliance status and obtain a tax clearance certificate. Taxpayers can utilise the system to identify if they owe money or have unfiled tax returns, as well as to rectify any inaccuracies.

Rather than a manual Tax Certificate, the new TCS system generates a TCS PIN in real-time. Using the TCS PIN, any corporation (or government) can view your tax compliance online. By selecting the “tax status” menu option on eFiling, you can apply for various certificates of good standing through the TCS system. SARS tax clearance certificates are valid for one year from the date of issue. For encashing your RA you will need the emigration tax clearance certificate.

Submit your RA withdrawal documentation

The insurance company holding your policy must receive all the necessary documentation once your tax cessation is approved, including proof that you have been tax resident in your new country of residence for three consecutive years.

Await tax directive from SARS

SARS uses a tax directive to instruct employers, fund administrators or insurers on how to deduct employees’ taxes from specific lump sums paid to a taxpayer or member. For example when a member has reached retirement age and has elected to transfer his or her retirement interest to a preservation fund or retirement annuity fund.

After completing the above steps, you will need to withdraw your RA and move your funds overseas. Members of pension preservation funds / provident preservation funds (with no prior withdrawals) can still access their retirement benefits.

When you cash in your RAs, the insurance company must first obtain a directive from SARS before deducting the proper amount of tax.

Transfer RA funds

Upon completion of this process, the funds can be transferred offshore. Bear in mind that you have one year from the issuing of the emigration TCS to transfer the funds – do not delay once you have started the timer of getting the TCS

Our skilled cross-border experts have years of industry knowledge and can guide you through this process, giving you peace of mind that your RA encashment will be as stress-free, convenient, and cost-effective as possible.


When transferring your RA out of South Africa, you deserve the best exchange rates, costs, and personalised service. Get in touch with our team at +27 (0) 21 657 2153 or saforex@sableinternational.com.