Access to pension fund after emigrating

A Fin24 user has emigrated and wants to know whether she can access money in an SA pension fund. She writes:

I worked in SA for six years and permanently relocated abroad last year.

Upon resignation, I did not elect to have my pension cashed out, since at that point I had no intention of emigrating. Hence I still have money in a pension fund in South Africa.

Is there any way of getting the money cashed out now or will I only be able to access it upon retirement? I am in my early 30s.

Abraham van der Westhuysen, Citadel advisory partner, responds:
 
The pertinent question to be asked, is whether a formal emigration process has been followed or not?

In the instance where a South African citizen resides abroad, but has not formally emigrated, the law around pension funds does not allow for full withdrawal of the entire retirement benefit amount, only for a maximum of one third.

On the other hand, if a formal emigration process has been followed, you are then allowed to apply for a full withdrawal of the retirement benefit with the relevant supporting documents in the form of the emigration approval.

This will have the result of an adverse tax liability similar to any pre-retirement withdrawal.

The current scales that would be applied are 0% tax on the first R25 000, 18% tax payable on the amount above R25 000 and below R660 000, 27% tax on the amount above R660 000 and below R990 000 and then 36% tax on any amount above R990 000.
 
If one has a view to maybe return to South Africa one day or you are comfortable with receiving a South African income post retirement, the option also remains to leave the funds in a preservation fund until such time.

Bear in mind that in such an instance, once you formally retire out of this vehicle one day, any income has to be paid to a South African account - that is your “blocked” emigration account - and then needs to be transferred abroad and converted to the currency you reside in by your bank.

Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers. Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.

ZAR/USD
17.02
(+0.10)
ZAR/GBP
21.24
(+0.02)
ZAR/EUR
19.21
(-0.28)
ZAR/AUD
11.85
(-0.14)
ZAR/JPY
0.16
(+0.07)
Gold
1777.74
(+0.14)
Silver
18.17
(+0.97)
Platinum
819.99
(+1.42)
Brent Crude
42.82
(0.00)
Palladium
1913.00
(+0.13)
All Share
55024.05
(+0.92)
Top 40
50636.20
(+0.91)
Financial 15
10264.03
(+1.12)
Industrial 25
76693.82
(+0.18)
Resource 10
51045.32
(+1.81)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 1623 votes
I am taking a hit, but should be able to recover in the next year
23% - 2131 votes
My finances have been devastated
34% - 3194 votes
It's still too early to know what the full effect will be
25% - 2317 votes
Vote