Expats Abroad: Here’s What You Need To Know About Your South African State Pension

It’s a question that we encounter frequently from South Africans living abroad or planning to move abroad: do I qualify for a state pension in South Africa, and if I do,  how do I get it? Let’s take a look at what expats need to know about the older persons’ grant.

 

Government Pension Fund South Africa

 

How does the South African pension system work?

The South African pension system can be accessed in three ways:

1.  The non-contributory South African Social Security Agency (SASSA) grant that is provided to the majority of pensioners that qualify according to a means-based test.
2. The various insurance-based employee/company pensions and provident funds.
3. Private pensions and insurance arrangements, like annuities.

 

What is the South African government old age pension?

The SASSA Grant for Older Persons is the South African version of a state pension and approximately 75% of the elderly population receives this grant which is funded by tax contributions. Eligibility for this old age pension in South Africa is means-tested and it is provided to those with income and assets that fall below a certain threshold.

The minimum age for the South African state pension is 60 years. While there is no specific legal retirement age, the government recognises that it is accepted for people to retire at 55, 60, or 65. Practically speaking, the actual retirement age of an individual depends on the eligibility rules of their workplace pension fund. For example, individuals in the public sector who will receive their South African pension through the Government Employees Pension Fund (GEPF) might be given the option of early retirement where they have contributed at least ten years in public service.

 

Who is eligible for an old age pension in South Africa?

The SASSA Grant for Older Persons is open to South African citizens and foreigners who have gained citizenship or permanent residence status and still reside in South Africa. As this grant is means-tested rather than contribution-based, you don’t have to have lived in South Africa for any period of time to claim it, but do need to currently reside in SA.

 

However, in order to qualify for this South African pension, you must:

• Be a South African citizen, permanent resident or refugee
• Live in South Africa
• Not receive any other social grant for yourself
• Not be cared for in a state institution
• Not earn more than R86 280  if you are single or R172 560 if married
• Not have assets worth more than R1 227 600 if you are single or R2 455 200 if you are married.

You can learn more about old age pension eligibility rules on the South African Government website.

 

How much will you get?

• The maximum amount that you will get is R1 860 per month.
• If you are older than 75 years, you will get R1 880.

 

Government Employees Pension Fund payout

It is possible to receive your pension payout from the Government Employees Pension Fund if you are living abroad. Once a year, GEPF sends overseas pensioners a Life Certificate to complete and send back –  this certificate confirms that the pensioner is still alive and should continue receiving a pension from GEPF.

 

What you need to know about South African pension income if you’re living abroad

• Pension income is payable only in South Africa into a South African account (such as a non-resident account), but it is possible to remit this money offshore.
•  As this money has a South African source, it will be subject to South African tax as well as any Double Taxation Agreement that may exist between South Africa and your country of residence.
• This means that you might be eligible for tax relief in South Africa, resulting in the annuity or pension income being taxable only in your new country of residence.
• You should think carefully about your payment frequency –  if your fund rules allow it you should elect to have your pension income paid in an annual instalment in advance.
• This means you’ll receive your pension income from South Africa once a year and only need to make a single offshore transfer (and pay one set of fees) to access it.

 

FinGlobal: cross-border financial service specialists

Choosing a partner to handle your finances back in South Africa is one of the most important decisions you’ll make. Choosing FinGlobal means choosing a partner that understands that your situation is completely unique, which is why we’ll tailor a financial solution to meet your specific needs and goals.

To make your life easier, we offer a full suite of cross-border financial solutions and highly personalised service to ensure faster payouts over a shorter period compared to other providers, and at better exchange rates than commercial banks.  payouts over a shorter period than other providers, and with better exchange rates than commercial banks.

 

All of our services are fully compliant with transparent, fixed fees. We can help you with:

• Pension income
• Retirement annuity withdrawal
• Financial emigration
• Tax clearance
• Tax refunds
• Tax emigration
• Foreign exchange

To see how we can help, contact FinGlobal today.