Our forex guide to inheritance and retirement fund transfers

When it comes to moving money across borders, most people think of straightforward transactions such as sending funds offshore for investment or bringing money home from overseas. But what happens when the transfer isn’t part of a business deal or personal allowance?

If you’ve inherited money, are winding up a loved one’s estate, or are receiving a retirement payout after emigrating, the process can look very different. These types of transfers often involve additional paperwork, regulatory approvals, and timing considerations that can easily cause confusion or delays if not handled correctly.

In this guide, we unpack the most common but often overlooked forex flows for South Africans living abroad.

Inheritances and estate transfers

If you were born in South Africa but now live abroad – perhaps you emigrated years ago and have since become a tax resident or even a citizen of another country – you’ll encounter a unique process when inheriting funds from South Africa. These transfers are not handled under the same rules as normal allowances; instead, they fall under Circular 8 of the South African Reserve Bank’s (SARB’s) exchange control regulations.

Inheritances for emigrated South Africans

Formal emigration via SARB (before 2021)

• You are regarded as a non-resident for SARB exchange control purposes.
• No cap applies to the amount of inheritance you may receive.
• The executor uses your emigration reference number as proof of non-resident status.
• Funds can be remitted in full without additional SARS compliance.

Ceased tax residency via SARS (after 2021) or never on the SARS database

• Since March 2021, the SARB financial emigration process was phased out and replaced with a tax residency cessation test handled through SARS.
• For inheritances or life insurance payouts up to R10 million, you do not need a SARS Manual Letter of Compliance.
• For amounts exceeding R10 million, SARS must issue a Manual Letter of Compliance before your authorised dealer can remit the funds.

Example: Let’s say you left South Africa in 1998 to settle in Australia, but never formally emigrated. You’re now an Australian citizen and pay tax there, yet under South African exchange control rules, you may still be viewed as “South African resident.” If you can show proof of your Australian citizenship and tax residency, your R2 million inheritance from your late father’s estate can be transferred to you once Exchange Control approves the application.

Pension and retirement annuity pay-outs

Retirement savings, including pensions, provident preservation funds, and retirement annuities, are another common source of cross-border transfers. How these funds are treated depends heavily on your tax residency status.

Tax residency matters

If you have ceased tax residency and remain on the SARS database

• You need a SARS Approval for International Transfer (AIT) Pin for “Emigration” before a retirement lump sum can be remitted offshore.

If you have not ceased tax residency and are still on the SARS database

• You must first apply to cease tax residency and then generate a SARS AIT Pin for “Emigration.”

If you have not ceased tax residency and are no longer on the SARS database

• Payments from retirement annuities, pension preservation, or provident preservation funds may require additional steps depending on the amount, policy type, and your age.
• SARS may request reactivation of your tax number, or our team can assist by applying for a Manual Letter of Compliance.

Excon and AIT requirements

SARB Exchange Control rules differentiate between capital (lump sums) and income (recurring annuities/pensions):

Lump sum withdrawals

• Treated as a capital transfer.
• Require an AIT application, even if you have ceased tax residency.
• Supporting documents include proof of tax change of status and your AIT Pin.
• Funds can only be remitted once SARS issues the tax directive.

Recurring pension or annuity payments

• Treated as income flows, not capital.
• Can usually be remitted offshore without an AIT application once Exchange Control approval is confirmed.
• Supporting documents from the insurer or pension fund and a SARS TCS letter may still be required.

Example: A South African doctor who moved to the UK 10 years ago wants to cash in a retirement annuity. For a lump sum, the insurer will require SARS clearance, a tax directive, and an AIT PIN before funds can be transferred. If he opts for recurring monthly payments instead, the insurer can remit the payments directly as income, subject to Exchange Control approval and proof of non-residency.

With the right guidance, navigating these requirements is straightforward. Our team can handle the paperwork and approvals, ensuring your funds are transferred efficiently and compliantly.

Stress-free cross-border transfers

Most guidance focuses on standard channels like personal allowances, offshore investments, or business payments. In reality, many people encounter more complex transfers, such as inheritances, retirement funds, or estate payouts.

Handled correctly, these transfers can be simple and stress-free. If handled incorrectly, funds may be delayed, unexpected taxes may apply, and access to your money can be slowed, creating unnecessary frustration at a time when you need it most.

Get expert help with your estate and retirement transfers

Deceased estates and retirement funds may not make headlines, but they are critical channels in the forex system. They involve deeply personal situations, whether you are dealing with the loss of a loved one or accessing your life savings after emigrating.

If you are navigating one of these transfers, don’t assume the standard forex rules apply. Seeking expert guidance early can save you time, money, and unnecessary stress.

Contact Sable International today to speak with a dedicated broker and take control of your international money transfer. Contact our forex team on [email protected] or call +44 (0) 20 7759 7554 or +27 (0) 657 2153.