If you’ve recently relocated to Australia or you’ve been living down under for some time already, transferring your South African pension to Australia is going to be a priority for you soon. Especially if you have no intention of retiring in South Africa, it makes sense to transfer your pension to Australia to protect your retirement savings from the fluctuations of the Rand in a volatile currency market. How do you go about doing this? Take a look at the pension fund rules for withdrawals in South Africa, and how to get around these rules, smartly.
What are the South African pension fund rules on withdrawal
The rules around pension funds are strict for a reason. Pensions, provident funds and retirement annuities are all savings vehicles designed to get you to your retirement destination and sustain you through your golden years. Accessing the contents of your savings before retirement age would defeat the purpose of preparing for the future – which is why it’s only permissible in very limited circumstances to get your hands on your pension money before you’re actually pensionable.
Read more about the rules around pension fund withdrawals here.
Is it possible to make an early withdrawal from my South African pension fund?
So you still want to know: can I withdraw money from my pension before the age of 55? Before legislative amendments came along on March 1 2019, the pension fund withdrawal rules contained in the South African Pension Funds Act made it all but impossible to withdraw any part of a retirement benefit or borrow money before retirement before the pensionable age of 55. Aside from a handful of limited exceptions mentioned above, your pension fund is technically untouchable. This legislative amendment extended to pension funds the emigration benefit that was previously only applicable to retirement annuities.
Is there a way to work around the pension fund withdrawal rules? With the right approach, every problem has a solution. As a South African expat, the smartest way to transfer your pension to Australia is to withdraw it once you’ve completed the process of financial emigration.
What is financial emigration?
Financial emigration is an exchange control process that must be completed with the South African Reserve Bank in order to have your exchange control residency status changed from “resident” to “non-resident”. What does this do? It means that the Reserve Bank applies a different set of exchange control rules to your cross-border money moves, and makes you eligible to access your South African pension fund in order to transfer it to Australia.
Aside from being able to access your pension fund after financial emigration, there are a handful of other advantages that you will enjoy:
- You’ll find that it’s easier to access and transfer South African capital and income abroad because exchange control restrictions aren’t as tight for non-residents.
- You can access and cash in the full value of your retirement annuity before you reach retirement age.
- It will be easier to remit your future South African inheritances abroad.
- There’s a chance you qualify for a tax refund on exiting your pension fund.
How to transfer my South African pension to Australia
Once you’ve completed the process of financial emigration, you get complete access to the full value of your pension fund, less fees and tax. Moving your pension savings abroad to Australia makes sense if you’re no longer planning on retiring in South Africa. If you’re not planning on going back, why leave your savings where they’re vulnerable to the effects of currency volatility?
Once the proceeds of your South African pension are made available to you, you’re simply an international transfer away from getting your hands on your money in Australia. It’s at this point that you’re going to find that you may need advice on reinvesting your funds and the local tax implications of doing so in Australia. This is where it’s important to choose your financial services intermediary carefully, as the right partner will have the necessary financial emigration specialists to work closely with financial planners and tax professionals on a customised financial emigration plan to ensure that you get the best advice for your specific circumstances and the most efficient tax structure for your retirement goals.
FinGlobal: Can help you to transfer your pension to Australia
Financial emigration from South Africa and transferring the proceeds of your pension fund to Australia isn’t something you should tackle on your own. It’s complicated, time-consuming and can be problematic if you don’t know what you’re doing. We’ve helped more than 60 000 clients since 2011, and we have a 100% success rate in everything we touch. It’s not boasting if it’s simply stating the facts.
We are the financial emigration specialist of choice for South Africans across the globe because we promise:
- Truly personalised financial solutions tailored to your circumstances
- Complete convenience with all services rendered remotely
- Minimal paperwork for you – we handle everything on your behalf
- All the experts you need, under one roof ready to answer your questions
- That everything we do is completely above board and legally compliant
All of which adds up to a shorter wait for your payout, with a better return and at exchange rates that are more favourable than commercial banks. Furthermore, our costs and fees are fixed and transparent – you’ll always know upfront what you’re in for, but you’ll only have to pay our fee on successful completion of your transaction.
Ready to get strategising on how to transfer your South African pension to Australia? We can’t wait to show you how simple and seamless we can make it for you. Contact us to get started.