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What To Do With Your Living Annuity When You Are Looking To Move Abroad..

May 2, 2019

When looking at leaving South Africa, it’s likely you’re going to want to take your finances with you. While this can sometimes be a complicated and stressful process depending on your South African assets, wrapping up your finances is normally easy enough, and can simplify your financial future once you’re abroad.
 
Whether you’re planning to emigrate, looking to retire overseas or have already moved, it’s now possible for you to complete a process called financial emigration. But why would you want to do this? Financial emigration is an exchange control and SARS matter. It involves making a formal application with the South African Reserve Bank (SARB) and SARS to become a non-resident of South Africa. This means that you will not lose your South African citizenship or passport, it is simply for exchange control and tax purposes. Once your application has been approved, our in house foreign exchange division, Capta FX will be able to take control of your assets in South Africa. Your bank account will be closed and any cash proceeds of any of your assets will be paid into a designated “blocked” Rand account. This account is used solely to transfer your funds overseas.

 

WHAT ASSETS WOULD REQUIRE FINANCIAL EMIGRATION: 

 

  • Your retirement annuity, pension and provident funds

  • Assets declared in your application such as properties, investment assets, vehicles, etc

  • Inheritance you may receive in South Africa

  • Proceeds from insurance policies

  • Passive income received from sources such as annuities, property rental, trusts and payments for services rendered in South Africa

 

All of the above-mentioned assets, except for retirement annuities, can be transferred without financial emigration, as long as the value falls within the exchange controls prescribed annual allowances.
 

WHAT ABOUT LIVING ANNUITIES...

 

One of the classic dilemmas we see clients face who are looking to move abroad or who are already living abroad is how to structure and manage their existing living annuities.  This is due to the fact that one cannot externalise or commute a living annuity unless it is below a certain value – i.e. typically R50,000 if you took a lump sum at retirement. Getting the income paid abroad can sometimes be problematic and expensive.

The great news is that if you are a South African looking to move abroad or currently living/retiring abroad and are invested in existing living annuities, Capta FS is now able to offer you the option of transferring your living annuity into a portfolio with full offshore exposure through various offshore securities.

 

HOW BEST TO STRUCTURE YOUR LIVING ANNUITY TO CATER FOR YOUR OFFSHORE NEEDS...

 

Many South Africans living overseas have their retirement savings tied up in SA pension funds, with little or no offshore exposure and ultimately with their pension paid out locally in Rand. In response to this predicament, Capta FS, together with their preferred investment partners, has put together an Offshore Living Annuity offering, which is essentially a South African living annuity product completely invested in offshore funds. Capta FS  has developed a solution for our wealth clients that invests 100% of the Living Annuity offshore using various mechanisms available via our partner platforms.

Many South Africans are unaware that this option exists, no doubt because the limitations and guidelines within living annuities are not fully understood by clients and their advisors. We have put this solution together because we believe it ticks all the boxes for clients who are currently living abroad or plan to emigrate/retire overseas. Once funds move from a retirement annuity or a pension/provident fund into the living annuity such funds are no longer constrained to a maximum level of 30% allocated offshore.


GET ADVICE BEFORE YOU TAKE ACTION...

 

The process of financial emigration can be complex and each situation is unique, so it’s always a good idea to get in touch with a South African financial emigration specialist who can carefully consider your personal circumstances and advise you on the best course of action when it comes to your financial portfolio.  It is also essential to get impartial advice from a qualified wealth and tax specialist. Capta FS is now able to assist with all these needs and assist with the process.

 

Get in touch with us today by calling us on (011) 568 4462 

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