South African annuities

[Janine]

I'll still have this conversation with my financial consultant, but if there is anybody who has some experience with this (with things that worked out well or maybe some "pit falls" to look out for) it would be great to know them in advance.

As I understand, an annuity has to run its full term and will only pay out once I go on pension or on the earliest on my 55th birthday. I also understand that I can stop paying it before the end of the contract, but will then still only receive the amount in the annuity at the end of the term.

But now: is there a way to let the annuity pay out when leaving the country? Can this be done when I only have temporary residence or is permanent residence/citizenship required before paying out?

If this can be done, will this amount only be transferred to a similar type of fund in Australia, or will the amount be paid out to me and am I free to invest this in which ever way I fancy?

I would also like to know if there is any additional tax considerations. But even if one pays more tax at this stage as one would have when going on pension, I believe it is still better to take the money with me.

Thanks,

Janine.

[Riekie]

I don't know much about this, but this bit I know:

You can not have your annuïties paid out if you leave RSA on a Temporary Visa. If you have PR or Citizenship, you can have it paid over ONLY if you are emigrating permanently which is another process I still don't know much about. (This is the info we were given by a finance guru when we enquired about the same thing).

[Bob]

Do most South Africans take out a pension plan in their course of their working life??

I take it there's no old age pension in South Africa.

[Mara]

I don't know if the laws have changed in the last 12 years since we left. When we left we were not allowed to do anything about our retirement annuities, except to make them paid up. We were required to lodge the original documents with the bank for safe keeping. We had to wait until we turned 55, at which time we took the third that we were allowed and the balance has to pay out to us as a monthly pension. This has to go into a SA bank account from which it can then be transferred to us. It is our choice whether we transfer it monthly, quarterly or annually. I may just add that we emigrated officially at the time to NZ where we had permanent residence.

[Cindylou]

When my mother emigrated I arranged that the company paid her annuity directly to her bank account in Aus. In order to do that I had to get clearance from SARB via her bank. We had to prove that the policy was purchased with retirement funds (she transferred all her funds into one living annuity) and that she has officially emigrated. (Also make sure that the originating company does not charge tax on the payments.) At present these payments are being treated by the Aus gov as taxable income and so we are now in the process of applying to the Aus Tax Office for exemption on those funds.

Bob - the SA state pension is about AUD 140 per month, so if you want to have a comfortable old age you must make your own plans.