Thinking about moving overseas but worried about what will happen to your retirement savings? You’re not alone. One of the biggest questions South Africans ask when planning to emigrate is: “Can I still access my South African retirement funds if I leave the country?”
The answer isn’t as simple as yes or no—it depends on the type of retirement savings you have, your age, and your tax resident status in South Africa. If you already have a living annuity in South Africa, this usually means you’re over 55 and have already retired. At this stage, your options for accessing your funds are limited, but there are still ways to manage your income effectively while living abroad.
Let’s unpack the living annuity rules in South Africa, what you can and cannot do, and how your move overseas could affect your retirement income.
Understanding living annuities in South Africa
A living annuity is designed to provide retirees with a regular income from their retirement savings. According to retirement fund legislation, once you retire, you must use at least two-thirds of your retirement savings to purchase either a life or living annuity, whether your funds come from a pension, provident, preservation, or retirement annuity fund.
The remaining one-third of your savings can be withdrawn as a cash lump sum at the time of retirement, but only before purchasing an annuity.
Read more: What happens to my living annuity if I emigrate from South Africa?
Life annuity vs living annuity in South Africa
A living annuity offers flexibility. You can adjust the amount and frequency of your income on an annual basis to meet changing financial needs.
Key features of living annuities in South Africa include:
- Drawdown flexibility: You select your income, subject to living annuity drawdown limits South Africa, which must be between 2.5% and 17.5% of your capital.
- Payment frequency: Income can be paid monthly, quarterly, bi-annually, or annually.
The downside is that your income depends on investment performance, so there’s a risk of outliving your savings. On the plus side, any balance left after your death is transferable to beneficiaries.
By contrast, a life annuity provides a fixed, guaranteed income for life. While it may increase with inflation, you cannot adjust the amount, and the capital is generally not transferable to heirs. You can convert a living annuity to a life annuity, but not the other way around.
Read more: Living vs life annuity – Which is best when planning to retire abroad?
Can you cash in a living annuity in South Africa?
The short answer is no. A living annuity cannot be cashed in South Africa, because it’s designed to provide ongoing income, not a lump sum.
There is one exception: if your annuity value falls below the living annuity withdrawal limit R125 000, you may request a full payout. In this case, your provider will obtain a tax directive from SARS to deduct the correct tax before paying out the balance.
Note: The R125 000 limit applies across all annuities held with the same insurer.
Read more: Can you cash in your South African living annuity?
Living annuity withdrawal rules in South Africa
Under South African law:
- Withdrawals are only permitted if the total value is under R125 000.
- Drawdown rates must remain between 2.5% and 17.5%.
- Adjustments to drawdown and payment frequency can only be made once a year.
These rules are in place because your annuity is designed to provide long-term security rather than a lump sum payout.
Retirement option: remaining a tax resident while living overseas
Here’s something many expats don’t realise: you can continue your living annuity in South Africa while living abroad without breaking your tax residency.
- If you’re still considered ordinarily resident in South Africa (for example, you keep property, family, or business interests here), SARS may still regard you as a tax resident, even if you’re abroad long-term.
- As a tax resident, your living annuity income is taxed in South Africa at normal marginal rates, just as if you never left.
- You can transfer your income abroad, subject to tax clearance and exchange control requirements.
Some people deliberately remain tax residents to avoid exit tax or because it suits their new country’s tax rules.
Retired abroad? How your living annuity will work in South Africa – tax residency vs tax emigration
Here’s how your position changes depending on whether you stay a South African tax resident or complete tax emigration from South Africa.
Living annuity and tax residency: what changes when you emigrate?
| Aspect | Remain a South African Tax Resident | After Tax Emigration (Non-Resident) |
| Tax status | Taxed in South Africa on worldwide income. | Taxed in South Africa only on SA-sourced income (incl. living annuity). |
| Tax on annuity income | Normal living annuity tax South Africa rates apply. | Normal living annuity tax South Africa rates apply.
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| Double taxation | Possible if your new country also taxes annuities, unless protected by a double taxation agreement of South Africa retirement income. | Same risk, but DTAs often assign taxing rights to one country. |
| International transfers | Paid into a SA account, then transferred abroad (requires tax clearance and SARB compliance). | Same process, but you must update the SA The same process applies, but you must update the SA bank with your bank with non-resident status and overseas banking details. |
| Capital access | Only if value is under R125 000 withdrawal limit. | Same rule applies — emigrating does not change withdrawal limits. |
| Other retirement products | Bound by local living annuity rules South Africa. | Bound by local living annuity rules South Africa.
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| Estate planning | Balance passes to nominated beneficiaries. If no beneficiaries, an SA estate need to be wound up. | Balance passes to nominated beneficiaries. If no beneficiaries, an SA estate needs to be wound up.
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Tax on living annuity income in South Africa and abroad
- South Africa: Whether resident or not, your provider withholds tax before paying your annuity.
- Your new country: Some countries tax worldwide income, which could mean double taxation. This is where double taxation agreements in South Africa provide relief for expats.
Examples:
- United Kingdom: South Africa taxes your annuity; the UK does not.
- Australia: Only Australia taxes your annuity; South Africa should not.
Can a living annuity be paid out overseas?
Yes. You can choose to receive your living annuity income in a South African account and transfer it abroad. This process requires Approval for International Transfer from SARS and compliance with South African Reserve Bank exchange control rules. Many expats use scheduled transfers to reduce timing risks and currency fluctuations.
While you cannot cash in your living annuity after emigration (unless the remaining balance is below the living annuity withdrawal limit of R125 000), you can continue receiving income locally or abroad and manage potential double taxation through a Double Taxation Agreement.
FinGlobal: cross-border financial specialists
Managing a living annuity after relocating from South Africa can be tricky, especially with overlapping tax systems. FinGlobal helps South Africans abroad with:
- Living annuity international money transfers from South Africa
- Tax compliance in South Africa for expats
- SARS tax emigration and tax non-resident confirmation
- Withdrawing retirement annuity funds after tax emigration
Our experts simplify the process, so you stay compliant and in control of your retirement income in South Africa, leaving you free to enjoy the good life abroad. Ready to plan your financial future with confidence? Contact FinGlobal today for tailored advice on managing your South African living annuity abroad.