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.

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