How to access your South African retirement annuity while living overseas

While accessing a retirement annuity (RA) or preservation fund from overseas is possible, many people underestimate the complexity of the process.

SARS compliance requirements, tax residency rules, supporting documentation and international payment considerations can all create delays if you're not properly prepared.

In this interview, Sable International's Forex SA Director, Tim Powell, explains the most common challenges South Africans face when trying to access their retirement savings from abroad, why the process often takes longer than expected and how proper planning can help you avoid costly delays.

Watch the full interview below or continue reading for the key takeaways.

How to access your South African retirement annuity from overseas

What is the biggest misconception in terms of getting your retirement annuity paid out while you're overseas? And where do most people get caught out?

I think the biggest misconception in our experience is that people underestimate the time frames. It's a lot longer than they expect, and a lot more frustrating than they expect. In terms of where people get caught out, I would say the biggest one is SARS. I think when people think they've left South Africa, they think they've left SARS, which is not the case. To access your RA, you need to be compliant with SARS, and everything needs to be up to date.

What do I need to be tax compliant with SARS?

Depending on how long ago a person left South Africa, they may have their SARS tax number, may just have deactivated it or fallen off the system, or they may not have lived in South Africa for a long time, in which case they still have a SARS number, but it's not compliant. So, the list can be long, depending on their situation, and it often involves updating one's details with SARS.

For example: your new address details. Or sometimes the person can't find their eFiling login details, so they've got to go through the process of getting eFiling activated again. Often, they've got outstanding returns, and sometimes even with penalties.

So, it’s a matter of filing those returns, sometimes objecting to the penalties so that you don’t have to pay them, and only then are you compliant, and you can start the process of changing your status and going through the tax clearance process.

How long does it take to access a South African retirement annuity from abroad?

In our experience, this process can take at least four to five months. What can delay the process is where the tax affairs aren't in order, and we've got to get the client compliant first. Some of the other challenges are the client's tax profile overseas. We need proof of that overseas tax profile, and clients often don’t have that yet.

The three-year rule tax rule for South African retirement annuities

Generally, individuals must have ceased South African tax residency and maintained tax residency elsewhere for at least three consecutive years before they can access retirement savings under current rules.

Start preparing before you need your South African retirement savings

What the client can do, even before the three-year rule is up, is ensure that their tax profile is compliant, so they have a tax number and are up to date with their affairs. Then, when they meet the change of status requirements, they are already ahead of where they need to be when it is time to make the application.

Many people try to handle this process themselves in order to save costs. How does using a professional firm like Sable International add value?

I was actually chatting to my team about this yesterday, and in their opinion, at least half of the people who come to us have already tried this process themselves and they've experienced the stumbling blocks and the frustrations and the obstacles. Especially in terms of dealing with SARS and the asset managers that have the retirement annuities.

Two specific challenges include:

1. Time zones. Many people are in Australia or the States and trying to call South African call centres, whether at SARS or their asset managers, can be challenging.

2. The retirement annuity has to be paid into a South African bank account, and depending on how long ago they left, often their bank account is closed and they don't have a bank account, so that's one of the services that we offer as well.

We’ve been through all the obstacles and we've seen the barriers, so we will get the client to the finish line. Sometimes it takes a little bit longer than others, but we know how to get the client there.

Need help accessing your South African retirement savings?

Sable International provides a fully managed service for South Africans living abroad who want to access their retirement annuities and preservation funds.

Our team can assist with:

• Updating your SARS tax status to non-resident
• Obtaining SARS AIT/Tax Clearance
• Opening a bank account for you
• Liaising directly with your investment or insurance provider
• Securing your SARS tax directive
• Transferring your funds safely and efficiently overseas

Speak to one of our retirement fund specialists today and find out whether you qualify to access your South African retirement savings. Get in touch: [email protected] or +44 (0) 20 7759 7554 (UK) +27 (0) 21 657 2133 (SA)+613 (0) 8651 4500 (Australia)