We probably all have friends or family who have emigrated to another country in the last 5 years, or who are planning to emigrate. We also have many clients who work globally and return on a regular basis.
Thus we get asked what happens to your Retirement Annuity upon emigration?
A retirement annuity is a tax friendly investment vehicle intended specifically to save for retirement and subsequently provide income post-retirement.
The following examples are the only scenarios in which you can access your Retirement Annuity.
- You reach the age of 55.
- The fund value is less than R15 000.
- You become physically disabled.
- If you have been a non-resident for South African tax purposes for a period of three consecutive years.
As an example, if you decide that you are going to move to Canada permanently, you should be able to break your South African tax residency the day you leave. You would then have to wait for three years after this date to be able to access your retirement annuity, at that point you would be able to withdraw the full value of the fund and be liable to pay the applicable withdrawal taxes.
If you plan on returning to South Africa (or at least have not yet decided) I would suggest keeping the RA in place. Contributions can still be made from your South African bank account although you’re not physically here. You can also decide not to contribute anymore, but still be invested in the investment structure.
We have experienced clients returning to South Africa after they withdrew their RA and spent it on the emigration process and settling in overseas. Subsequently, having to start from scratch.
Remember that there are always variables and individual specific needs, thus making it important to consult with your Wealth Manager in the process.
Ruvan J Grobler RFP™
*This is not financial advice.