Revised July 2014
Retirement Annuities
And
Emigration
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 recognized by the South
African Revenue Service (SARS) and the
South African Reserve Bank (SARB).
Emigration clarified
It is important to understand what is defined as
emigration by the SARB and SARS. The
Exchange Control Handbook published by the
SARB determines that residents are able to
emigrate and the definition of resident refers to
someone (a natural person in this instance) that
is permanently resident in SA or domiciled
here. Permanent residency for this purpose is
not directly linked to a permanent residence
permit. Therefore, a foreign national that is
permanently resident in SA will also be seen to
emigrate when leaving the country on a
permanent basis. This is a subjective test and
circumstances and duration spent in the
country will be considered.
If a foreign national enters the country on a
temporary basis (for example on a temporary
working contract) and that person makes a
declaration to the authorized dealer that he/she
is in SA for a limited period of time and intends
to return to the country of origin when the
contract is terminated, that individual will not be
able to emigrate and therefore will not be able
to access the funds in the retirement annuity
based on emigration. (Note all major banks are
authorized dealers that act as agents of the
SARB for the purposes of exchange control.)
When advising a foreign national on an
investment in a retirement annuity it is
important to determine the future access to the
funds prior to making the recommendation. If it
is found that the person cannot emigrate from
SA as shown above, it is important to explain
that access to the retirement annuity will be
restricted until retirement, disability or death (or
if the retirement annuity is made paid up and
the value in that fund is less than R7 000).
Important note:
Access to a retirement annuity due to
emigration is restricted to any time prior to the
retirement date being reached. No withdrawal
due to emigration will be allowed after the
retirement date. If a person has reached the
retirement date as defined in the rules of the
fund, he/she will only be entitled to a maximum
1/3 cash lump sum.
Each retirement annuity fund rules are unique.
Where a client is older than 55 the rules will
have to be consulted to determine when the
retirement date is. Many fund rules define the
retirement date to be the selected ‘maturity’
date on the retirement annuity policy,
irrespective of when the member actually
retires.
The Momentum fund rules define the retirement
date as the date after the member has
requested retirement from the fund, when all
the requirements necessary to give effect to the
instruction has been provided to the
Momentum, provided a member is eligible to
retire on that date in terms of the Income Tax
Act. Therefore, if a client is older than 55 and
the member has not yet informed the fund of
his wish to retire, the retirement date has not
been reached and withdrawal due to emigration
will be possible.
 Administrative requirements to access
funds
The member will have to submit the following
documents to Momentum to show that the
formal emigration process was followed:
Note:
The pay-out will be taxed as a retirement fund
withdrawal and the net amount will form part of
the overall emigration allowance.

- Form C, and
*******************
If the member is still in the process of
emigrating:

- Tax clearance certificate

(IT21(a));”Application Form for Tax
Clearance Certificate”

- Completed back stamped 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 the member has reached

55 years but not yet retired a copy of the
retirement fund rules and a copy of the
policy contract.

If the member has already emigrated:

- Copy of Tax Clearance Certificate in

respect of emigration;

- The member’s certificate of residence

issued by the tax authority of the country
in which the member resides;

- A letter from an authorised dealer stating

the account holders name, account
number and that the account is blocked

- In the event that the member has reached

55 years but not yet retired a copy of the
retirement fund rules and a copy of the
policy contract.