We speak to quite literally hundreds of people from all over the world each and every month that want advice and guidance about what to do with retirement annuities they have left behind in South Africa, so we thought it may be helpful to outline what we believe are the major pros and cons of the two key options you have, which are effectively to cash in now or take a pension at age 55.
Before we get into the detail it’s important to note that at age 55 you can’t simply withdraw the cash from a retirement annuity as a lump sum; you will have to complete the same process that is required to surrender the policy before retirement age. In short, leaving the policy in place until age 55 doesn’t make things any easier.
Full Surrender (at any time before age 55)
• Funds available to you now – no requirement • Proceeds taxable in South Africa.
to wait until you reach age 55.
• Eliminate exchange rate risk by transferring
the full lump sum to your local currency.
• If no other assets, you can remove yourself
from the financial system in South Africa.
• Proceeds can be used for any purpose,
wherever you choose.
• Attractive pension transfer option if you live
in the UK.
• Eliminate administrative burden at age 55.
• Eliminate risk of changes in pension
legislation impacting you negatively.
• The process followed aides the transfer of
inheritance from South Africa, in the future.
Retirement Option (from age 55 onwards)
• More tax efficient over the longer term. • No access to funds until you reach age 55.
• Exchange rate risk; income in your local
currency is subject to fluctuation
• Takes many years to transfer the full capital
• You must maintain a financial presence in
South Africa for the life of the annuity; submit
tax returns etc.
• Income is taxed at source in South Africa.
• Administrative burden associated with
transferring funds piecemeal.
• Exposed to changes in pension legislation in
• Costs associated with regular international
money transfers; bank fees to send and receive funds.
To determine what option best suits your circumstances why not take advantage of the free, no obligation assessment and consultation we offer. Once complete you’ll be in a position to make a fully informed decision.
Click here and we’ll call you.