Retirement Annuities and Emigration

        Did you know? In South Africa, the Pension Fund Act and the Income Tax Act allows for the withdrawal from a Retirement Annuity Fund if the member is in the process of emigrating or has already emigrated from South Africa.  The legislation stipulates that the emigration must be recognised by the South African Revenue Service as well as the South African Reserve Bank. How does the SARB and SARS define emigration? The Exchange Control Handbook published by the SARB determines that residents are able to emigrate. Resident refers to: someone (as a natural person in this instance) who is a permanent resident in SA or domiciled here.  Therefore, a foreign national that is permanently resident in SA will also be seen to emigrate when leaving the country on a permanent basis. How would you access funds in a retirement annuity? Each insurance company would require certain forms completed as well as If you are still in the process of emigrating: Tax clearance certificate (IT21(a)); “Application form for Tax Clearance Certificate” Completed back stamped form MP336 (b) form.  This is a list of the member’s assets including the value of the retirement fund. Letter from the authorised dealer that confirms that the emigration has been placed on record with the SARB. In the event that you have reached 55 years of age but not yet fully retired a copy of the retirement fund rules and a copy of the policy contract. If you have already emigrated: Copy of Tax Clearance Certificate in respect of emigration The member’s certificate of residence issued by the tax authority of the...

How do we benefit from having a Retirement Annuity?

“What’s the point of having a Retirement Annuity when I’m still relatively young?” When we think of retirement annuities, we seem to forget that old age creeps up much quicker than anticipated, and the worst part is, once we realise we need to start saving, we are suddenly overwhelmed with a huge capital shortage.  Thousands of people are confronted with this problem on an annual basis. “How am I supposed to benefit from something if I can’t even withdraw the full amount before a certain age?” Well, there are many benefits attached to investing in a Retirement Annuity. When you pass away, the retirement annuity is not included in your estate for estate duty purposes.  Upon your death your loved ones, or chosen beneficiaries can withdraw the full fund value as a cash lump sum.  The lump sum will be tax deductible. Your retirement annuity is protected against insolvency.  The same applies, should you be insolvent at the time of your death.  This means that your beneficiaries will be protected. On retirement preferential tax tables apply to your lump sum benefit received Should you own a retirement annuity you will be tax exempt from all returns achieved in the underlying fund.  This includes capital gains tax, income tax and dividends withholding tax. You are even entitled to a tax deduction for any contributions made- up to 15% of taxable non-retirement funding income.  This is currently in addition to any tax deduction for pension fund contributions. A retirement annuity can also be used as an estate planning tool for a suitable client Estate planning is the process of anticipating and arranging...