Transferring Annuities To Australia

[cruiser]

Hi All

I'm sure this question must have come up before, but as it was not in my sphere of interest at the time I would like your indulgence to bring it up again.

Has anyone used the organisation "Cashkows" to transfer your pensions/retirement annuities across to Australia? If so, how was their service? And how does it work?

In SA, once one is eligible/of age to cash in an annuity, one can take up to 30% in cash up front and the rest in a monthly pension payment. With using Cashkows does one get the full amount out of the country (less tax, expenses etc) or does one also get the 30% up front and the rest in monthly payments but in Australia?

I'm sure that Cashkows will answer these questions, but the main thing for me is to know if they are an organisation that one can trust with these issues.

[JDJoburg]

Hi All

I'm sure this question must have come up before, but as it was not in my sphere of interest at the time I would like your indulgence to bring it up again.

Has anyone used the organisation "Cashkows" to transfer your pensions/retirement annuities across to Australia? If so, how was their service? And how does it work?

In SA, once one is eligible/of age to cash in an annuity, one can take up to 30% in cash up front and the rest in a monthly pension payment. With using Cashkows does one get the full amount out of the country (less tax, expenses etc) or does one also get the 30% up front and the rest in monthly payments but in Australia?

I'm sure that Cashkows will answer these questions, but the main thing for me is to know if they are an organisation that one can trust with these issues.

If you formally emigrate, you can take the proceeds of your RA fund as a "withdrawal benefit" (as opposed to a retirement benefit). This means that you can take the full value as a lump sum - you are not limited to a one-third lump sum. Essentially, this is similar to having your company pension fund paid out to you when you resign pre-retirement. The tax implications are the same as with a pension fund withdrawal.

Taking your RA proceeds as a withdrawal lump sum upon formal emigration is allowed in terms of legislation, it is not something that is unique to Cashkows. Cashkows is an organisation that can handle the administrative processes that are required to "formally" emigrate and to make an emigration withdrawal from your RA fund.

I did this by myself but several members of this forum have used Cashkows and have been very happy with them. The only thing I don't like is the fact that their fee is a percentage of your RA proceeds: I don't see why you should pay more to have, say, a R500 000 RA paid out than you would if you had a R250 000 RA - the process is the same. Be that as it may, most people will probably find the fees to be quite reasonable, especially given the amount of red tape that can be involved. Cashkows does have a good reputation and that goes a long way.

[cruiser]

Many thanks. That clears it up for me.

I will most probably go it on my own like you have done. Reason being that when I went through the process of obtaining my Aus passport and my wife's spousal visa I did not use a consultant either and managed quite well, and avoided the consultants fees. Not that I didn't trust the consultants, like with Cashkows,I just found that I was able to understand what was required and could handle the red tape.

I have a further question, if you don't mind?

I have a RA where I have already taken the 30% lump sum, and receiving a monthly "pension". If and when I formally emigrate, would I be able to take the rest as a lump sum too?

If you formally emigrate, you can take the proceeds of your RA fund as a "withdrawal benefit" (as opposed to a retirement benefit). This means that you can take the full value as a lump sum - you are not limited to a one-third lump sum. Essentially, this is similar to having your company pension fund paid out to you when you resign pre-retirement. The tax implications are the same as with a pension fund withdrawal.

Taking your RA proceeds as a withdrawal lump sum upon formal emigration is allowed in terms of legislation, it is not something that is unique to Cashkows. Cashkows is an organisation that can handle the administrative processes that are required to "formally" emigrate and to make an emigration withdrawal from your RA fund.

I did this by myself but several members of this forum have used Cashkows and have been very happy with them. The only thing I don't like is the fact that their fee is a percentage of your RA proceeds: I don't see why you should pay more to have, say, a R500 000 RA paid out than you would if you had a R250 000 RA - the process is the same. Be that as it may, most people will probably find the fees to be quite reasonable, especially given the amount of red tape that can be involved. Cashkows does have a good reputation and that goes a long way.

[JDJoburg]

Many thanks. That clears it up for me.

I will most probably go it on my own like you have done. Reason being that when I went through the process of obtaining my Aus passport and my wife's spousal visa I did not use a consultant either and managed quite well, and avoided the consultants fees. Not that I didn't trust the consultants, like with Cashkows,I just found that I was able to understand what was required and could handle the red tape.

I have a further question, if you don't mind?

I have a RA where I have already taken the 30% lump sum, and receiving a monthly "pension". If and when I formally emigrate, would I be able to take the rest as a lump sum too?

If you've already taken your lump sum, it means that you have purchased an annuity (an income stream) - the money is not sitting in a Retirement Annuity Fund any more, so the rules pertaining to emigration withdrawals don't apply (you've taken a retirement benefit, a withdrawal benefit is where you withdraw prior to taking a retirement benefit. Sorry if that sounds a bit pedantic, but an "annuity" and a "retirement annuity fund" or "RA" is not the same thing.

Annuities can in some instances be commuted (meaning that you convert the remaining income stream into a lump sum), but there are different rules depending on the type of annuity. For purposes of commutation, it is irrelevant whether you are emigrating or not. If you have purchased a "living" annuity, where the capital (the purchase price of the annuity) is invested in an underlying investment fund with income payments being deducted off this nominal capital balance, you can usually commute the annuity once the capital balance drops below a certain amount. When I left SA a year or so ago, this amount was R50,000 if you had taken the one-third when the annuity was purchased, or R75 000 if the full RA proceeds was used to purchase the annuity. This may have changed since I left, so I think your best bet would be to call the relevant life company and ask to speak to one of their retail legal advisers - they should be able to tell you under which circumstances you'd be able to commute the annuity.

If you can't commute the annuity, you'll have to leave it where it is and have the income remitted to you in Australia. Since this will be income accruing to you and not capital, it won't be subject to the normal foreign investment / emigration capital restrictions.

[cruiser]

Again, many thanks.

I will contact the relevant company to find out what circumstances apply to my commuting the annuity.

If you've already taken your lump sum, it means that you have purchased an annuity (an income stream) - the money is not sitting in a Retirement Annuity Fund any more, so the rules pertaining to emigration withdrawals don't apply (you've taken a retirement benefit, a withdrawal benefit is where you withdraw prior to taking a retirement benefit. Sorry if that sounds a bit pedantic, but an "annuity" and a "retirement annuity fund" or "RA" is not the same thing.

Annuities can in some instances be commuted (meaning that you convert the remaining income stream into a lump sum), but there are different rules depending on the type of annuity. For purposes of commutation, it is irrelevant whether you are emigrating or not. If you have purchased a "living" annuity, where the capital (the purchase price of the annuity) is invested in an underlying investment fund with income payments being deducted off this nominal capital balance, you can usually commute the annuity once the capital balance drops below a certain amount. When I left SA a year or so ago, this amount was R50,000 if you had taken the one-third when the annuity was purchased, or R75 000 if the full RA proceeds was used to purchase the annuity. This may have changed since I left, so I think your best bet would be to call the relevant life company and ask to speak to one of their retail legal advisers - they should be able to tell you under which circumstances you'd be able to commute the annuity.

If you can't commute the annuity, you'll have to leave it where it is and have the income remitted to you in Australia. Since this will be income accruing to you and not capital, it won't be subject to the normal foreign investment / emigration capital restrictions.

[StevePorter]

Hi to our fellow Saffers "down-under"

As a director of cashkows.com I've been following this thread and thought I should make you aware of some forthcoming changes in the way we levy fees, as this is for some a point of contention.

Currently, as referred to above, our fees are calculated as a percentage of the value of the investments that we surrender, however having listened to our customers we have decided to change this and will shortly be introducing a new structure which will see us applying a fixed fee when it comes to the surrender of individual policies.

There are many questions raised around the issue of retirement annuities, living annuities and life annuities which we are always happy to answer, so please feel free to contact us.

Steve Porter

[JDJoburg]

Hi to our fellow Saffers "down-under"

As a director of cashkows.com I've been following this thread and thought I should make you aware of some forthcoming changes in the way we levy fees, as this is for some a point of contention.

Currently, as referred to above, our fees are calculated as a percentage of the value of the investments that we surrender, however having listened to our customers we have decided to change this and will shortly be introducing a new structure which will see us applying a fixed fee when it comes to the surrender of individual policies.

There are many questions raised around the issue of retirement annuities, living annuities and life annuities which we are always happy to answer, so please feel free to contact us.

Steve Porter

That's great Steve, a fixed fee per RA policy would certainly make a lot more sense.

[Olkabolka]

I have been trying to get my RA from Liberty for the last 2 years. So many excuses and every time they think of something different. The last time they said they havent' received any paperwork from me, then they said they've lost everything, and then said someone else is looking into the matter. That was about 6 months ago, since then, no news from them. It's not a lot of money, but it is mine, and I want it, even if I can only buy a new pair of shoes!! Or pay for a trip for my mom to come and visit us in Australia.

I've started the process with Cashkows, and we hope this nightmare will come to an end!

[Guest]

Hi - could someone please clarify the following for me:

If you have formally emigrated from SA, does the WITHDRAWAL Benefit only apply before the RA matures? Or does it also apply at maturity?

I may have missed an answer to this question somewhere else, so my apologies if this is a repeat question.

[JDJoburg]

Hi - could someone please clarify the following for me:

If you have formally emigrated from SA, does the WITHDRAWAL Benefit only apply before the RA matures? Or does it also apply at maturity?

I may have missed an answer to this question somewhere else, so my apologies if this is a repeat question.

"Withdrawal" in respect of RA funds means that you are taking the money prior to receiving a "Retirement" benefit from the fund (assuming that you have formally emigrated of course).

The way most RA contracts are worded, you are not obliged to take a "retirement benefit" when you reach your selected retirement age (as indicated in the contract) - it generally only means that you have the option of taking a retirement benefit at that point, but you are not obliged to do so. For instance, if your indicated retirement age (let's call it the "maturity date" of the contract) is age 55, you can usually let the fund know at that stage that you wish to proceed with the policy on an "open ended" basis. The fund will let you know of your options at retirement and will not automatically pay out a retirement benefit and terminate the policy. If you then choose to continue with the policy, you can elect to take a retirement benefit from the policy at any stage in the future.

In general, this means that you can elect to take a "withdrawal benefit" at any stage (even after the nominated "maturity age"), as long as you have not yet instructed the fund that you wish to take a retirement benefit.

It is always best to rather check with the particular fund though, just to be 100% sure - although I think it is unlikely, some funds may apply their rules differently in this regard. I worked for one of the major players in the industry before my emigration, and their rules were applied as per my explanation.

[Guest]

Thank you JDJoburg - That was exactly what I needed to know. I appreciate you taking the time to fully explain.

[miraclebabycaw]

Anyone know what the tax implications are on withdrawing an RA at the time of immigration? My hubby and I both have RA's which we are thinking of withdrawing when we go, but balk at the idea of losing 43% of it in tax. I also have a Preserver fund which I setup from Pension from my old company 10 years ago..does that fall under the same category? Can you also "transfer" your RA's to a company rather in Oz?

Thanks all

[hansman1000]

We are also moving to Australia, in fact my wife and one child have already settled in Geraldton. I went to Old Mutual to stop my annuaty. They informed me that there is national legislation in place that requires te following prior to paying out.

1. Obtain and complete a MP 336 ( form from the reserve bank

2. Take this form to your bank

3. The bank will sign it and will keep the original docs but will issue you with a copy

4. Take the copy to SARS and apply for tax clearance

5. After you have received the tax clearance you must take the forms back to the bank

6. The bank will then send the tax clearance plus the MP 336 form to the head office

7. The head office will do their bit and then send it to the reserve bank

8. The reserve bank will the send the docs back to your bank

9. Your bank will create a blocked rand account for you or will convert one of you existing accounts. At this stage the bank will see you as an immigrant and will cancell you credit cards and over drafts.

10. With the proof of a blocked rand account you can go to the insurer and only then will they start to disinvest your money and pay it out. - Then you may transfer the money.

11. The process will take 16 weeks and longer

[JDJoburg]

Anyone know what the tax implications are on withdrawing an RA at the time of immigration? My hubby and I both have RA's which we are thinking of withdrawing when we go, but balk at the idea of losing 43% of it in tax. I also have a Preserver fund which I setup from Pension from my old company 10 years ago..does that fall under the same category? Can you also "transfer" your RA's to a company rather in Oz?

Thanks all

You won't pay anywhere near 43% on an RA withdrawal. There's a sliding scale that applies, based on the amount of the withdrawal:

0 to R22,500 - R0 tax

R22,501 to R600,000: 18% of the amount over R22,500

R600,001 to R900,000: R103,950 + 27% of the amount over R600,000

R900,001 and over: R184,950 + 36% of the amount over R900,000

Remember that all retirement fund withdrawals (i.e. from RA funds, pensions funds and provident funds as well as preservation funds) will be aggregated, so you will apply the tax scales to the combined withdrawals.

You are only allowed to make one (partial or full) withdrawal from a preservation fund before retirement. If you haven't made a withdrawal before, you'll be able to make a full withdrawal. If you have indeed made a withdrawal previously, you won't be able to access the money until you reach retirement age. These rules (relating to preservation funds) will apply regardless of whether emigration is involved or not.

Last point: you can't "transfer" directly from a South African retirement fund to an Australian super fund. You'll have to take the withdrawal as cash, pay the tax, jump through the usual exchange control hoops, and then transfer the money to you Australian bank account. From there, you can of course contribute the money to a super fund; however, you should ideally seek advice in this regard because a large lump sum super contribution can have negative tax consequences under certain conditions.

[hansman1000]

According to Old Mutual national legislation prevents any withdrawal. The ONLY way you can get your annuaty paid out is via the MP336 b form route issued by the reserve bank

[hansman1000]

Let me try again: According to Old Mutual national legislation prevents any withdrawal. The ONLY way you can get your annuaty paid out is via the MP336 b form issued by the reserve bank. Not even a single withdrawal is allowed. One must follow the route described above. I am in the process as we speak. This is so frustrating. Many many many emails was exchanged between myself and Old Mutual, I even visited their office in the Centurion mall.....there is no other way to get one's RA money than by using the MP336 b form and to follow the process as described by government.

[JDJoburg]

Let me try again: According to Old Mutual national legislation prevents any withdrawal. The ONLY way you can get your annuaty paid out is via the MP336 b form issued by the reserve bank. Not even a single withdrawal is allowed. One must follow the route described above. I am in the process as we speak. This is so frustrating. Many many many emails was exchanged between myself and Old Mutual, I even visited their office in the Centurion mall.....there is no other way to get one's RA money than by using the MP336 b form and to follow the process as described by government.

I like the way Old Mutual words it: "national legislation prevents any withdrawal". In fact, national legislation is what makes it possible to make a withdrawal from an RA fund if you formally emigrate, it's not as if Old Mutual has found a way to circumvent the legislation!

By the way, my comments with regards to "one withdrawal" refers to withdrawals from preservation funds, not from RA funds. You don't need to complete any MP336 b form to make a withdrawal from a preservation fund - anyone can make one withdrawal from their preservation fund, regardless of whether they are emigrating or not. Once they've received the money, they would need to obtain Reserve Bank clearance in order to move their money out of the country if they wanted to use their foreign investment allowance or if they wanted to take it as an emigration allowance (i.e. "formal emigration", which requires the submission of an MP336b form).

Completing an MP336b form is thus not a requirement to make a withdrawal from a preservation fund (or a pension / provident fund for that matter), it is only a requirement for "formal emigration", which is not the course taken by most emigrants. In order to make a withdrawal from an RA fund, however, you will have no choice but to "formally" emigrate, meaning that the submission of an MP336b form will be compulsory.

We have posted lots of information pertaining to formal emigration and the withdrawal of RA money in the Money section, hope you find it useful.

It took me about a year to get all of my RA money paid out, with my bank and SARS (who needs to issue tax clearances and directives) being the major culprits rather than the relevant insurers and the Reserve Bank.

Hope you have better luck, it can be a frustrating experience.

Edited April 2, 2012 by JDJoburg

[miraclebabycaw]

You won't pay anywhere near 43% on an RA withdrawal. There's a sliding scale that applies, based on the amount of the withdrawal:

0 to R22,500 - R0 tax

R22,501 to R600,000: 18% of the amount over R22,500

R600,001 to R900,000: R103,950 + 27% of the amount over R600,000

R900,001 and over: R184,950 + 36% of the amount over R900,000

Remember that all retirement fund withdrawals (i.e. from RA funds, pensions funds and provident funds as well as preservation funds) will be aggregated, so you will apply the tax scales to the combined withdrawals.

You are only allowed to make one (partial or full) withdrawal from a preservation fund before retirement. If you haven't made a withdrawal before, you'll be able to make a full withdrawal. If you have indeed made a withdrawal previously, you won't be able to access the money until you reach retirement age. These rules (relating to preservation funds) will apply regardless of whether emigration is involved or not.

Last point: you can't "transfer" directly from a South African retirement fund to an Australian super fund. You'll have to take the withdrawal as cash, pay the tax, jump through the usual exchange control hoops, and then transfer the money to you Australian bank account. From there, you can of course contribute the money to a super fund; however, you should ideally seek advice in this regard because a large lump sum super contribution can have negative tax consequences under certain conditions.

Thanks so much that is awesome news. I was really thinking it was going to be like 43%. I must be honest I haven't made too many enquiries yet, we are waiting for the final answer on our 176 visa (medicals were received Friday in Syndney so hopefully soon). I have made no withdrawals on the preserver fund so then should be able to withdraw it all. I can't remember if I paid tax on that when I drew it out of my pension fund but I don't think so, so I guess that will also have the same tax implications. Sounds like I should be getting hold of Liberty Life soon if it takes 4 months to sort out :yikes:

Thanks all

[miraclebabycaw]

Once they've received the money, they would need to obtain Reserve Bank clearance in order to move their money out of the country if they wanted to use their foreign investment allowance or if they wanted to take it as an emigration allowance (i.e. "formal emigration", which requires the submission of an MP336b form).

Completing an MP336b form is thus not a requirement to make a withdrawal from a preservation fund (or a pension / provident fund for that matter), it is only a requirement for "formal emigration", which is not the course taken by most emigrants. In order to make a withdrawal from an RA fund, however, you will have no choice but to "formally" emigrate, meaning that the submission of an MP336b form will be compulsory.

Just an FYI, new legistlation allows for a R2Mill allowance without the need of having to apply to the reserve bank for a clearance, so in theory if your total funds are less than that from Pension etc, you have no need to fill in a form MP336B.

That being said, damn I will have to fill one in as mine is definately an RA.

[Pixel]

If you can't commute the annuity, you'll have to leave it where it is and have the income remitted to you in Australia. Since this will be income accruing to you and not capital, it won't be subject to the normal foreign investment / emigration capital restrictions.

Firstly, thanks everyone for all the information, it's all very informative. We've actually already withdrawn our RA's, but have parents who will be emigrating soon, who are pensioners and have already received a lump sum retirement benefit. My question is, if their monthly income (annuity/income stream) is remitted to them in Australia, would this foreign income be taxed in Australia?

Also, is there anything preventing them from not formally emigrating, and leave the income to be paid into their South African bank account every month, and then using their annual holiday allowance to make a transfer when they visit South Africa?

Would really appreciate any advice.

[Donovan83]

Can I just check - provident funds can be withdrawn, subject to the sliding scale tax mentioned earlier (where the first 22 500 is tax free, etc)?

[miraclebabycaw]

Can I just check - provident funds can be withdrawn, subject to the sliding scale tax mentioned earlier (where the first 22 500 is tax free, etc)?

Yes they can. Same as pension and Preserver funds..or so I have been told. I have already done my Preserver and Liberty got a tax clearance certificate and then paid me the money in the preserver less the amount on the tax clearance. Pretty much worked out to what I had worked it out to be

[Jill]

Hi

Has anyone recently applied for their RA to be paid out in Australia?

[jnsq]

Has anyone used either Cashkows or Rand Rescue recently , last 1-2 years to financially emigrate including RA 'cashing out' ;-)

Would be keen to understand your experiences.

[BronPreston]

Hi All

I'm sure this question must have come up before, but as it was not in my sphere of interest at the time I would like your indulgence to bring it up again.

Has anyone used the organisation "Cashkows" to transfer your pensions/retirement annuities across to Australia? If so, how was their service? And how does it work?

In SA, once one is eligible/of age to cash in an annuity, one can take up to 30% in cash up front and the rest in a monthly pension payment. With using Cashkows does one get the full amount out of the country (less tax, expenses etc) or does one also get the 30% up front and the rest in monthly payments but in Australia?

I'm sure that Cashkows will answer these questions, but the main thing for me is to know if they are an organisation that one can trust with these issues.

Have you thought maybe to try exchange4free?