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The Expat’s Guide: Transferring Your South African Pension to the UK

By April 28, 2020April 9th, 2021FinGlobal

The Expat’s Guide: Transferring Your South African Pension to the UK

April 28, 2020

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It’s a question that around 246 000 South Africans expats living in the UK will face at some point: is it possible to transfer a pension from South Africa to the UK? If you’ve been living abroad for a number of years and you no longer have any intention of retiring in South Africa, what are your options?

Pension fund withdrawal rules in South Africa

Generally speaking, a pension fund is meant to provide for your golden years, so it makes sense that you shouldn’t be allowed to withdraw these funds before then. According to the rules, there are limited circumstances under which you can touch your pension fund.

Access to your pension savings is limited as long as you’re a South African resident. There are a few minor exceptions that relate to resignation and retrenchment, but aside from these limited circumstances you can only access your pension once you’ve retired and complied with the administrative requirements attached to your pension. Even once you’ve reached retirement age, you’re still only allowed to cash out a third of the fund and you’ll be taxed on that lump sum withdrawal while you’re at it. With the remaining two-thirds of your pension, you’ll be compelled to purchase a South African annuity in order to withdraw a monthly pension income, which in turn is taxable. That’s a lot of tax, right?

Can I transfer my South African pension to the UK?

Once you complete the process of financial emigration, you are no longer considered a South African resident for exchange control purposes. This also means you’re now allowed to access the full value of your pension income (less tax) before the age of 55.

You read that right. Once you’ve formalised your emigration with the South African Reserve Bank, your pension fund money is yours to cash in and transfer abroad.

What is financial emigration?

Financial emigration is the formal process of breaking up with the South African Reserve Bank, for exchange control purposes, and changing your relationship status from “resident” to “non-resident”.

Are there benefits that come with financial emigration?

There are perks that come with every relationship status change and financial emigration is no different. Once you’re a non-resident (for exchange control purposes) you will find that it’s easier to:

  • Access and transfer South African capital and income abroad because resident exchange control restrictions no longer apply to you.
  • Access and cash in the full value of your retirement annuity/pension fund before the maturity date.
  • Get paid out from any future South African inheritance.

Transferring your SA pension to the UK: The process

The first step is determining how much you have available left in your South African pension to transfer to the UK, once you’ve paid tax and fund fees. Despite the fact that you are now entitled to do with the funds as you please, it’s a solid idea to seek professional tax advice because reinvesting your money in a UK pension scheme could yield massive growth and make your savings more tax efficient.

Why you should consider transferring your South African pension to the UK:

Taking control of the full post-tax value of your pension savings and shifting these funds abroad is critical right now to secure your financial future. Living your best retired life isn’t possible when the South African rand has such a volatile effect on your pension savings.

Long story short, it makes sense to transfer your South African pension abroad and reinvest in a UK pension scheme if you’re concerned with protecting your retirement savings by means of a stable, well-traded currency. Furthermore, if you ever decide to return to South Africa, your future will be paid for by Pounds. Moving back to SA with a UK pension means that you’ll get paid out in Pounds – which is a great prospect given the exchange rate.

FinGlobal: We can transfer your South African pension to the United Kingdom

Once you’ve decided that you’re ready to cash in your South African pension so you can transfer it abroad, we’re ready to step in and take over.

From your free, zero obligation telephonic consult we’ll gather all the necessary information to tailor a personalised financial emigration plan for you. We’ll complete all the formalities on your behalf and present you with signature-ready documentation, handling your financial emigration every step of the way through to completion.

You’ll know upfront exactly what you’re in for, when it comes to fees. Our rates are fixed, transparent and always clearly communicated. Because we don’t work on a commission basis, you’ll only ever have to pay our fees on successful completion of your requested service or transaction, and you can even pay out of your fund proceeds. No upfront payment required!

Let us help you with your financial emigration, retirement annuity withdrawal, tax clearance, tax refunds or foreign exchange requirements.

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