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A gift from the UK taxman…

By January 16, 2015July 25th, 2020Retirement annuities

A gift from the UK taxman…

January 16, 2015

…move your South African retirement fund into your UK pension and enjoy the bonus

Imagine if you will. You’re a South African family living in London. Mum, Dad and kids – all happily settled in a new home country. Life is great!

You earn a good salary in hard currency and contribute to a sterling denominated pension fund, to provide for your financial freedom in retirement. But what should you do with your retirement annuity, preservation fund or pension fund left in South Africa?

The simple answer is, withdraw the funds, convert to sterling and invest in your UK pension…
and here’s why:

  • In sterling terms you will most likely end up investing more in your UK pension than you withdraw from your South African pension. This is because of attractive incentives provided by the UK tax authorities for lump sum contributions to a UK pension. For example, if you are a higher rate taxpayer and invest £12,000.00, (transferred from your South African pension), the effect of the tax relief (incentive) can increase the value of the contribution to as much as £20,000.00. That’s a 40% “top-up” courtesy of the UK taxman!
  • Your pension funding will be under one roof; in the country where you live, in hard currency.
  • You eliminate future exchange rate risk; if you leave your South African pension in place you have no idea what it’ll be worth, in sterling terms, at retirement age.
  • You eliminate the future burden of administration, tax legislation and exchange control regulations which will impact your pension in South Africa.
  • Following the introduction of new rules on 1st April 2015 your UK pension will offer much more flexibility than a South African pension. For example, you will have the option to withdraw 100% of the fund value from age 55 onwards.
  • If you decide to return to South Africa in retirement you can receive the income from your overseas pension, tax free.

Of course you don’t have to reinvest the proceeds of a South African pension – you decide what’s best, but if you don’t need the cash we believe that the opportunity to “boost” your pension pot and bring everything under one roof in a hard currency is just too good to be ignored.

If you have a retirement annuity, preservation fund or pension fund in South Africa and would like to determine the benefit of transferring the proceeds to the UK let us call you or join our free webinar.


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