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devonport

Retirement Annuities

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devonport

Hi

I had dinner the other night with a friend and the topic of funds tied up in SA came up.

Apparently a new law has come out in SA ( July? ) where those who have formally emigrated can take out these funds out before they mature. So it appears that we can take out the money much earlier.

This sounds to good to be true. Can anyone throw some light on this? It would be great if this is true and that I can take what is left of my funds.

Thanks

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Kiena

It is correct, You can now with the new amendment act take your RA funds out when emmigrating.

Please see the attachement with the changes.

If you need any more information, I can find out for you as I am currently working for a Private Wealth Management company.

regards

Kiena

Taxation_Laws_Amendment_Act_3__2_.doc

Edited by Hendie

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devonport

Thanks Kiena

Will this still apply to those who left a while back ? I left 10 years ago. What will be the correct procedure to access these funds and how long will it take? Can I authorise someone in SA to handle all this for me?

Much appreciated

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Guest Barbara

I would like to know too. We left 4 years ago and would like to get the funds out now if we can.

Thanks

Barb

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Kiena

Thanks Kiena

Will this still apply to those who left a while back ? I left 10 years ago. What will be the correct procedure to access these funds and how long will it take? Can I authorise someone in SA to handle all this for me?

Much appreciated

I Will find out for you and let you know.

regards

Kiena

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Kiena

I will find out for you, I emailed our legal consultant and await her reply.

At which Insurance company is your RA invested?

Yes you can authorise someone to handle this.

The requested documents for this authorisation will depend on the Insurance company as each one have their own set of business rules.

I will talk to you soon.

Kiena

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Kiena

Hi guys

I received the following feedback from our legal consultant:

Until recently, members of retirement annuity funds could only access their RA benefits when they retired from the fund. Retirement from a RA fund is usually no earlier than age 55. Recent legislative changes to the definition of “retirement annuity fund” as set out in the definition section (section1) of the Income Tax Act, have changed this. In terms of this recent amendment, members of retirement annuity funds who formally emigrate out of South Africa, may access their RA benefits in the form of a lump sum (but will be taxed on that) even if they have not yet reached age 55.

Please keep in mind that the rules of the relevant RA fund are important. It may be necessary for the rules of the relevant fund to be amended before the fund can allow for this.

I would suggest that you contact the Insurance company where your RA's are invested and quote this legislation change and take it further.

Let me know if I you need any further assistance.

I should be here for a couple of more months (We are waiting for my husband's LMO to be approved for Alberta).

Kind regards

Kiena

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Guest Barbara

We sent an email to our Sanlam rep, he said they have forwarded it to their legal department and will get back to me.

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devonport

Thanks Kiena for the information. Hopefully I will be able to meet with success in this venture. My bank was Nedbank but my funds are with Old Mutual. Best of luck for your husbands LMO for Alberta.

I will keep in touch as i go through the process - if you do not mind.

Kind Regards

Martin

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Kiena

Thanks Martin,

Yes keep me in the loop, I hope that you will succeed!

regards

Kiena

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Kiena

Hi Barbara

I will cross all my fingers.

Let me know if you need any further assistance.

regards

Kiena

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devonport

Hi Kiena

This is the latest response that I received from Old Mutual

"Good Day Martin

Thank you for your request of 23 October 2008.

Please be advised that there was no finalisation yet on this legislation passed to the company . All companies are still awaiting the final rules and regulations. As soon as we have more communication we will inform you.

Regards

Nashe Huyser

Client Services

OMSTA "

Is this correct? Is there any idea when this will be legalised and made general knowledge. Seems like there is some sort of confusion on this new law.

Well I will continue to wait and hope - patiently...

Thanks

Martin

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Kiena

Hi Martin

I contacted Sars and await their reply on when this amendment will come into effect.

It is important to remember that the specific retirement Fund's will have to review their Funds' rules and allign the rules with the anitcipated Changes.

Unfortunately it is likely that the FSB will be swamped by requests for rule amendments and there may therefore be some delay in registering rule amendments.

As you said, we will have to be patient until this rules are amended.

I will inform you once I hear from SARS.

(if I am not mistaken the various funds have a deadline for amending this rules).

Speak to you soon.

Kiena

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devonport

Thanks again Kiena for your efforts. It appears that this could still take a while yet. Hope that all this economic turmoil will not affect any decisions.

How are your plans going? When will you be leaving SA?

Good luck and Take care

Martin

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Kiena

Hi Martin

We will just have to wait and see.

My husband's LMO was approved within 7 working days!!

Our WP applications are now at CIC PTA and we hope and pray that we will be able to leave soon.

I will keep you informed of any new developments in the RA situation.

Keep well.

Kiena and family

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Kiena

Hi Martin

Eventually I received a reply from SARS. Please see below.

-----Original Message-----

From: SARS, At your Service [mailto:DONOTREPLY@sars.gov.za]

Sent: 12 November 2008 09:13

To: Kiena Joubert

Subject: RE: Retirement fund and emmigrating

Dear Sir/Madam,

I refer to your email regarding "retirement annuity fund". I hereby confirm that the changes are deemed to have come into operation on 1 October 2007.

Regards,

Tax consultant

SARS National Call Centre

Business Resolution Area

-----Original Message-----

From: kienaj@Citadel.co.za

Sent: 2008-10-24 02:15:21 PM

To: pcc@sars.gov.za

Subject: Retirement fund and emmigrating

Good day

Please refer to the recent legislative changes to the definition of

"retirement annuity fund" as set out in the definition section (section

1) of the income Tax Act.

In terms of this recent amendment, members of retirement annuity funds

who formally emigrate out of South Africa, may access their RA benefits

in the form of a lump sum (but will be taxed on that) even if they have

not yet reached age 55.

Please confirm when this act will come into effect.

Kind regards

Kiena Joubert

CAS

Citadel

Private Client Wealthcare

Email: kienaj@citadel.co.za <mailto:kienaj@citadel.co.za>

I think you should contact Old Mutual and refer to this email I received from SARS.

Keep well.

Kiena

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devonport

Thanks Kiena. There appears to be confusion over this. I think it is the fear of money leaving SA en mass that is scaring the financial institutions in SA. I will be going to SA in Dec to visit my folks and will make arrangements from here now to see Old Mutual and hopefully to get things moving.

Take care and good luck with all your preparations

Cheers

Martin

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Lapalala

Hi Martin and Kiena,

Reading your postings has been really helpful to me. Would either one of you know the percentage of tax that will be kept by SARS? I have no other income in SA. Also wondering if my RA is set to maturity at age 55, will I get a higher amount if I wait till then, or if I should take out my money now.

I looked at some articles are CAD/ZAR forecasts and the ZAR isn't looking good unfortunately - although interest rates on savings in SA are like 11% with FNB!

Appreciate you two posting here!

Lapalala - in the snow.

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Kiena

Hi Lapalala

If you should take the lump sum now it would of course be a lesser amount as the illistrative amount on age 55.

The tax however should depend on the amount invested in your RA at present as tax is calculated on a sliding scale.

I am not allowed to give you advice because of the FAIS law in South Africa but I would rather take the lump sum as soon as the fund rules are amended because although at an interest rate of 11% the Rand is still depreciating and I would say that it is better to rather invest it abroad. :)

If you need to know anything else, please feel free to contact me and I will see what I can find out for you.

Kiena

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devonport

Thanks Kiena. I submitted your reply from SARS to Old Mutual and the following is their reply

"Kindly note that is was good that you have been keeping track of the operation. I once again agree with you there. Be advised that there was no finalisation yet on the systems, how we have to process and how the set up should go. All companies are still awaiting the final rules and regulations about the systems operations. As soon as we have more communication we will inform you."

It appears that the Financial Institutions are reluctant to implement the rules because many will then be pulling their money out of SA. It is frustrating but hopefully this will all be cleared up in the not too distant future. Good Luck Lapalala and I hope that you have success with your funds.

Cheers

Martin

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Kiena

Hi Kiena,

Thanks for your info on this board! I actually know Martin, but didn't know he was posting here till this thread.

My situation is that I left SA 12 years ago "officially" with my assets frozen at FNB. The only thing left was my RA.

Liberty Life has asked me to complete 2 documents (1) an ERB to request a tax deduction and (2) an RA options form for the withdrawal. They've not advised anything about FNB or SARB or SARS requirements.

I'm going to try to open a non-resident account from Canada, and then see if I can get paid out there and get a wire transfer here so the monies can be under CDIC.

The info I'm lacking is:

1. what is the withholding tax percentage from SARS for total withdrawal before vs after retirement

2. what the difference in amount is for before 55 vs after (Liblife don't seem to want to answer this question or maybe they can't?)

3. What SARS/SARB/FNB policies are there, if any? or does the financial institution holding the policy process all legal/federal requirements?

I'd really want to get the money out without a trip to SA as I'm now caregiving for my parents, but the CDIC is important so if I have to come for a week I will.

What's an LMO? I'm just curious. Btw I worked for a while in Alberta and it is much more beautiful than Toronto, the people are also much friendlier!

I appreciate any info you can give me, and best wishes with your soon-to-be move to Canada!

Regards, Irene

PS. if you want to post this message publicly, please remove my age, you know what females are like with this ;-)

Hi Irene (LOL)

1. I will contact SARS for you requesting the percentage holdback. This will take a couple of days out of previous experience.

2. Liberty is the one to answre this. When I do section 37 transfers (moving living annuities from other companies to mine example Liberty to Citadel) I want to pull my hair out when I am dealing with Liberty. From experience Liberty have to do calculations for you. Request them to this, because that is their responsibility towards you. Out of experience I would say they will only be able to give you an illistrative value for the retirement amount.

If you take it when you mature, I know you normally allowed to take two thirds and one third should be used to purchase a living annuity. Just ask Liberty about this as well. Liberty should actually be able to do a swift for the proceeds to your canadian bank account. We as a company do that allot. But then we invest most of our assets abroad.

3. Each fund has their own business rules and such rules needs to be approved by the FSB. They are the ruling authority. That is why most companies still cannot pay out the lump sums due to the rules still needs to be ammended and approved by the FSB. Once again Liberty should give you this information. Please remember in South Africa if you want answres you need to push and be firm.

LMO is a labour market oppinion. We are comming over with workpermits seeing that my husband landed a job in Edson. To be able to apply for a work permit, the HRSDC need to approve the joboffer first. Once you have that you can apply for the work permit and then they request you to go for your medicals and then you just wait for them to request your pasports.

Once in Canada we will apply for PR. If you want to apply for PR from within SA it take anything from 5-6 years.

Best of wishes

Kiena

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Kiena

O my word, It seems that they don't expect their investors to be on top of the situation.

It is my upmost pleasure to help where I can.

Keep me posted once you hear anyting.

(ps, Keeping my thumps, we await medical results - nearly at the end...)

regards

Kiena

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Lapalala

Ok, no tax info from Liblife. But they told me that I'll be getting approx 83% of my RA if I withdraw now rather than wait till maturity. Kiena, what I would like to do is to take out all of the RA. My impression is that for "formal" emigrants, we can just cash in the total amount as one lump sum, and move it wherever we want after paying the withholding tax. I don't like the idea of having to buy a living annuity in SA. Liblife has also advised that they will only pay into an SA account, hence the requirement to open a non-resident account. I will email them again to clarify this. Am exploring now whether I can do the whole thing remotely.

Some other suggestions on this board have mentioned ING - I think they only have corporate banking in SA; HSBC is the same. SBSA has corporate banking in UK, but nothing in Canada. My relatives and friends are reluctant to have this money deposited into their accounts due to potential SARS or AML investigations. Guess I can always run into Liblife, get a money order (wonder if they'll give me this), run across to the bank and buy a bunch of Amex travellers cheques! Actually I was being facetious, but now am thinking this may be a possibility?

Thanks Kiena and Martin for sharing your experiences. I'll also post whatever info I get.

Regards, Lapalala

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Kiena

Hi Lapalala

You see, that is why we took my husband's RA away from Liberty and invested it with ABSA (and the investment grew quite a bit If I may ad).

I don't understand why they do not want to transfer the funds abroad. Maybe they are lazy to do the admin it involves? You should demand an explanation from a manager.

Maybe you should wait until next year and take the lump sum then.

We will definetly take the lumpsum as soon as our PR comes through (we are going over with WP and will apply within SA for PR).

Best of luck and speak to you soon.

KIena

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