So, you’ve booked the one-way flight, wrapped up your farewell braai, and packed your suitcase (with a sneaky stash of Mrs Ball’s chutney). You’re ready to start your next chapter abroad. But wait—what’s happening with your South African provident fund?
Can you take it with you? Can you cash out your South African provident fund? Is it going to sit in South Africa forever like that Tupperware lid you can never find? Let’s unpack what happens to your provident fund when you emigrate from South Africa, how new rules affect your benefits, and how to access it when you’re ready.
What is a provident fund, again?
First, a quick refresher: a provident fund is a type of retirement savings account. It’s typically provided by your employer and it allows both parties to contribute to your retirement savings during your working years.
Unlike a pension fund, where you may be required to take a portion as a monthly income (annuity), a provident fund allows for a full lump sum withdrawal at retirement—or emigration, if certain conditions are met.
New provident fund rules you need to know about
South Africa recently introduced a two-pot system that affects how you can access your provident fund savings. This amends the rules around accessing your provident fund savings. Here are the South African provident fund rules you need to know about:
- March 2021 – vested vs non-vested rules introduced: This reform aligned provident funds with pension funds, which means that:
– Vested benefits (funds saved before 1 March 2021) can still be withdrawn 100% as a lump sum at retirement.
– Non-vested benefits (contributions after 1 March 2021) are subject to the one-third lump sum, two-thirds annuity rule at retirement. - September 2024 – two-pot retirement system introduced: This new system, effective 1 September 2024, applies prospectively and divides future retirement contributions into:
– A Savings Pot (one-third), which allows limited annual access (e.g. for emergencies).
– A Retirement Pot (two-thirds), which is preserved until retirement and must be used to buy an annuity.
It only applies to new contributions after 1 September 2024 and does not affect existing retirement savings unless transferred voluntarily. However, if you’re planning to emigrate from South Africa and meet the requirements laid out by the South African Revenue Service aka SARS, you can still cash out everything in your provident fund, including both vested and non-vested portions, under the correct circumstances. More on that below.
What happens to your provident fund when you emigrate?
Here’s where things get interesting. In the past, if you wanted to access your retirement funds, you had to go through financial emigration through the South African Reserve Bank which was a long and frustrating process. Thankfully, since March 2021, South Africa scrapped the old system in favour of something a little more modern: tax emigration, which is handled by SARS.
Now, if you want to access your provident fund after leaving South Africa, you must:
1. Emigrate for tax purposes, and
2. Remain a non-tax resident for three consecutive years.
That means if you left in 2022 and became a tax non-resident that year, you could hypothetically access your funds in 2025.
Read more: Tax emigration – how to become a non tax resident of South Africa.
Can I withdraw my provident fund after emigrating?
Yes—but not immediately. It’s a waiting game. Once you’ve completed the tax emigration process and maintained your non-tax residency for three full years, you’ll be able to request a full lump sum withdrawal of your provident fund. This includes both your vested and non-vested benefits. Of course, this is subject to tax.
But here’s a bonus nugget that’s good to know – you are allowed to make one pre-retirement withdrawal: Before retirement, you’re allowed one withdrawal from your provident fund, no matter your residency status. Whether you’re living in Johannesburg or juggling baguettes in Bordeaux, you’ve still got one shot at a pre-retirement cash-out.
Use it wisely because this is a one-time deal. After that, the three-year rule applies.
What are the typical documents I need to cash out my provident fund?
Admin alert! To process your provident fund withdrawal, you’ll generally need:
- Your Non-Resident Confirmation Letter from SARS
- A Tax Compliance Status (TCS) PIN from SARS
- Your SARS tax number
- A certified copy of your passport or South African ID
- Proof of your foreign address
- A completed withdrawal form from your fund
- Your banking details (a non-resident bank account in South Africa)
It might feel like a paperwork workout, but it’s worth it—especially if you’re working with a provider like FinGlobal, who can guide you through the process and handle the admin on your behalf.
How long does it take to get the money when cashing out a provident fund after emigrating?
Patience is key. Once everything is submitted and your application is approved, the transfer process can take between 4 to 12 weeks. This depends on your fund administrator, SARS timelines, and whether you’ve submitted all the correct documentation the first time (pro tip: double check everything!).
So, what should you do with your provident fund when you emigrate?
Every situation is different. Whether you choose to withdraw your provident fund after emigrating or preserve it until retirement, the key is to align your decision with your long-term financial goals. That’s why it’s helpful to talk to professionals (like us!) who understand cross-border finance, SARS compliance, and how to legally and efficiently get your money where it needs to go.
Don’t leave your money behind – FinGlobal can assist!
You’ve worked hard to build up your provident fund in South Africa. Don’t forget about it when you leave the country! Whether you’re chasing adventure, love, or a job in a faraway land, your money should be part of the journey too.
And if all this admin sounds overwhelming? No problem. FinGlobal specialises in helping South Africans around the world make sense of their retirement savings and tax obligations. Let us handle the paperwork while you focus on settling into your new home—with peace of mind that your nest egg is safe.
Contact us today to discover how we can help make your transition abroad seamless and hasslefree, taking care of your South African provident fund withdrawal and tax obligations.
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