STOP PRESS: Retirement Annuities: Withdrawals on Emigration

[JDJoburg]

The Taxation Laws Amendment Act No 3 of 2008 (“the Actâ€) was promulgated on 22 July 2008.

All I know so far is:

1. You'll be able to withdraw your RA benefits (before retirement age) if you are emigrating.

2. Only formal emigration via the Reserve Bank will be considered as "emigration", so it won't work if you're just using your foreign investment allowance and relocating.

3. Benefits will be taxed, probably in the same as would be the case with withdrawals from a pension / provident fund.

So now we don't have to wonder about this any more - it's a fact. Now it's just a question of time.

I do expect that the various retirement annuity funds (they are basically pension funds) will have to amend their rules first, to allow for the emigration withdrawal, so it might be a while before you'll be able to make the withdrawal.

That's all I know for now. Please don't ask me about the process involved, I'll post info on the Forum as soon as it becomes available.

Watch this space for further details.

[Gean]

Thanks Danie.........youre a star

Hows the exams coming ??

Regards

[Almost there]

YIPPEE!!! Will be following any updates on this & post if come across any.

THANK YOU!

[JDJoburg]

Thanks Danie.........youre a star

Hows the exams coming ??

Regards

Howzit Gean

Will be attending a course starting 1 September. But first there's the LSD to Sydney in August!

Cheers

Danie

[TheGrahams]

The Taxation Laws Amendment Act No 3 of 2008 (“the Actâ€) was promulgated on 22 July 2008.

All I know so far is:

1. You'll be able to withdraw your RA benefits (before retirement age) if you are emigrating.

2. Only formal emigration via the Reserve Bank will be considered as "emigration", so it won't work if you're just using your foreign investment allowance and relocating.

3. Benefits will be taxed, probably in the same as would be the case with withdrawals from a pension / provident fund.

So now we don't have to wonder about this any more - it's a fact. Now it's just a question of time.

I do expect that the various retirement annuity funds (they are basically pension funds) will have to amend their rules first, to allow for the emigration withdrawal, so it might be a while before you'll be able to make the withdrawal.

That's all I know for now. Please don't ask me about the process involved, I'll post info on the Forum as soon as it becomes available.

Watch this space for further details.

Thanks Alwyn (the grahams)

[celeste]

Thanks for this JD Joburg.

[penny]

Thank Danie

Again this forum has come through with information which we are desperately need!!!

Penny

[Bob]

Alright . . . . good news for South Africans taking their money out of South Africa . . . . but . . . .

Where are you going to park it when you bring it over to Australia?

Australia, as you know, is a typical Western country, with low birth rates and a decreasing work force in the years to come . . . . hence immigration.

However, this won't make up for the projected shortfall in years to come and there are moves to restrict migration because of the Kyoto Protocol which was signed by the Australian gov't recently.

That will put the brakes on the Australian gov't being able to afford a really good Old Age Pension for us all in years to come . . . and what will be available will be severely means tested to make sure that you don't have much in the bank or in assets.

so . . . . . you'll be required to look after yourselves to a greater degree than Australians are currently used to doing, or it will be a "bread & dripping" existence in the last few years of life.

That means you're going to have to make your money work for you right to the end.

Put your hard earnt money into an "Industry" superannuation fund instead of your regular commercial super funds.

Industry Super Funds, of which there are many, cover just about every trade and profession, they are set up with the member's interests foremost (instead of shareholders' interests being foremost) and have proven themselves to give back bigger returns into their members accounts in the medium and long terms.

I'm retired now, have a good income to live off and was the Superannuation bloke at my work in my day, giving advice to all the blokes who were coming up for their retirement.

I'm 57 and have been fully retired for two years, living off my superannuation and investments without a penny in gov't welfare coming my way.

Check it out . . . .

http://www.industrysuper.com/

[A&A]

Thanks for this update Danie, will make contact with our broker to see whether they've received the info and can start with a process as soon as PR is finalised

- although out of sight out of mind with some of these guys.....

Have a good weekend..

[Riekie]

That's fantastic news!!! Thanks!! (And thanks for the tip Bob!)

[zet]

Thanks! Really appreciated.

[Nolan]

Hi JD,

I had my RA paid up a couple of months ago, and got a call from a consultant this morning enquiring about the why's etc for having it paid up - so I told her of my plans of move away. Not to miss the opportunity, I then asked her about this new legislation that has been passed and she said she is aware of it, but advised me that it would'nt apply to me because my RA fund value is more that R7000.

Apparently, this new withdrawals on emigration is only applicable to people who have RA's with a value less than R7000. If your RA is valued at more than R7k, then you have to wait till retirement age.

Do you perhaps know anything about this? I hope its not the case and this is just a mis-informed consultant.

Thanks and regards,

Nolan

[JDJoburg]

Hi JD,

I had my RA paid up a couple of months ago, and got a call from a consultant this morning enquiring about the why's etc for having it paid up - so I told her of my plans of move away. Not to miss the opportunity, I then asked her about this new legislation that has been passed and she said she is aware of it, but advised me that it would'nt apply to me because my RA fund value is more that R7000.

Apparently, this new withdrawals on emigration is only applicable to people who have RA's with a value less than R7000. If your RA is valued at more than R7k, then you have to wait till retirement age.

Do you perhaps know anything about this? I hope its not the case and this is just a mis-informed consultant.

Thanks and regards,

Nolan

Hi Nolan

The legislation provides for 2 instances where you may take out the fund value of your Retirement Annuity fund prior to retirement:

1. If you make the RA paid-up and the remaining fund value is not more than R7000. The money can now be paid out to you, and it has nothing to do with emigration.

2. Upon your formal emigration. This is not limited to R7000.

Please note that you will not have much joy if you call your life assurance company - the legislation has just been passed, and it will take some time before the funds will have rules and processes in place to facilitate the withdrawal of RA benefits. Until such time, don't expect their client service teams to know much about this issue. In fact, your broker will probably also be unaware of it, unless he's pretty plugged-in.

So we all have to be a bit patient - give it a bit of time before you call your broker or the life assurance company.

I'll keep the Forum posted as soon as I know anything.

Cheers

Danie

[Nolan]

Hey thanks Danie,

I wish my broker was as "plugged in" as you are!!

He was like.....new legislation??? What new legistlation??? Do you have a website?? Let me get back to you.....

Thanks for the advice - will give my RA company some time and pursue this later (closer to leaving).

Cheers,

Nolan

[JDJoburg]

Hey thanks Danie,

I wish my broker was as "plugged in" as you are!!

He was like.....new legislation??? What new legistlation??? Do you have a website?? Let me get back to you.....

Thanks for the advice - will give my RA company some time and pursue this later (closer to leaving).

Cheers,

Nolan

In his defence, most brokers don't read the Government Gazette (who does, apart from lawyers?) - they usually wait to be briefed by the life assurance companies on legal issues.

In any case, until the life assurance company puts the rules and procedures in place, your broker can't help you.

So your broker's probably not completely dof! (even if he's clearly not that interested in new developments in his industry)

Edited July 25, 2008 by JDJoburg

[Tex]

The Taxation Laws Amendment Act No 3 of 2008 (“the Actâ€) was promulgated on 22 July 2008.

All I know so far is:

1. You'll be able to withdraw your RA benefits (before retirement age) if you are emigrating.

2. Only formal emigration via the Reserve Bank will be considered as "emigration", so it won't work if you're just using your foreign investment allowance and relocating.

3. Benefits will be taxed, probably in the same as would be the case with withdrawals from a pension / provident fund.

Hi Danie,

Thanks for the update...much appreciated!

Tex

[noodles]

Hi! That is good news for everyone! We are leaving next month for Tasmania and what we have already done is made both our RA's paid up - how will it affect us and is there still a way of getting it out SA if you have already left?

[No Worries Mate]

Danie

Thanks for all the info!

[JDJoburg]

Hi! That is good news for everyone! We are leaving next month for Tasmania and what we have already done is made both our RA's paid up - how will it affect us and is there still a way of getting it out SA if you have already left?

Whether you've already left or not shouldn't make a difference (nor would making the RA paid-up). As long as you have formally emigrated, you should be able to get the money. I'll post info once I know more.

[Almost there]

Hi JDJoburg

Have you seen this posting:

http://www.saaustralia.org/index.php?showt...mp;#entry147949

Hoping you have an update for us - have done a search online but can't find anything official - would be lovely!

[Cindylou]

Read this article in Moneyweb for a little more detail. You can also read the Explanatory Memorandum on the SARS website. As pointed out in other posts, this is presently a draft submission which has not as yet been legislated.

C'Lou

[JDJoburg]

Read this article in Moneyweb for a little more detail. You can also read the Explanatory Memorandum on the SARS website. As pointed out in other posts, this is presently a draft submission which has not as yet been legislated.

C'Lou

No C'Lou - it has in fact been legislated, as I pointed out in my post. The bill was passed into law in July. As I said, don't expect this news to be all over SARS's website, or to be known by your broker (or, in fact, your life assurance company's call centre). It will take a bit of time to filter through and the Retirement Annuity Funds (which are basically pension funds) must first change their rules to allow for the withdrawal.

If you don't read the government gazette, you would not know (for quite a while at least) that the bill was passed - and who reads the gazette?

I ABSOLUTELY PROMISE to post new info in this regard as soon as it becomes available. Charl, please pin this thread in the money section, if you don't mind.

Patience people, patience!

Edited September 2, 2008 by JDJoburg

[FERRO]

Liberty told us that they cannot cash out our RA yet and we would have to wait for their law to be updated!!

[Mark and Muriel]

Thanks Danie - same experience this side. Broker had no idea and Sanlam denied that such a thing even exists. Like dealing with a brick wall.

Mark

[JDJoburg]

Thanks Danie - same experience this side. Broker had no idea and Sanlam denied that such a thing even exists. Like dealing with a brick wall.

Mark

Yes Mark, don't even bother for now. Just hang in there, it is now just a question of "when" and not "if", thankfully. I suppose I should've just kept quiet about this, because everyone now seems to be frustrated and confused because their broker or their life assurance company knows nothing about it.

Unfortunately, there's a lot that people don't understand about how RA funds operate - it's basically a stand-alone pension fund, under the control of a board of trustees and usually administered by a life company (it is not a policy of which you are the owner; you are a member of the fund, which owns the assets). Any pension fund has a very pedantic set of rules pertaining to withdrawals and benefit payments - the fact that the law has now changed to make withdrawals possible, does not automatically change the rules of the fund. The rules can only be changed after following very specific procedures, and the new rules will have to be approved by and registered with the registrar of retirement funds. Until the rules of an RA fund change, withdrawals will not be possible, so don't expect anything but blank stares from the life company's call centre - they will know nothing of this until the rules have been amended.

These things take time, and that's why I advised everyone not to start calling their brokers or their life assurance companies just yet.

I say again - the law has changed, but the RA funds will need some time to amend their rules. It's just a question of time, please don't get upset when you draw a blank with your broker or your life company. As a matter of fact, give it until the end of this tax year. Oh, and watch this space - I'll let you all know once I have more news about this.

It seems like my "good news" has only caused stress thus far!