While the scheme has been open since 1 September 2024, there is little guidance for understanding two-pot retirement for South African expats. South African residents have been eschewing retirement planning advice and withdrawing billions from their savings ‘pot’ already. However, what about two-pot retirement for South African expats who have divested from the country, are living overseas and have parked their retirement for a rainy day?
TWO-POT RETIREMENT FOR SOUTH AFRICAN EXPATS
To not be negatively impacted, specialists from Tax Consulting SA say the timing must be just right for any withdrawal from two-pot retirement for South African expats, reports IOL. The good news, however, is that there is a golden window to access retirement funding for South African expats who’ve left the country.
Nevertheless, a lack of guidance on two-pot retirement for South African expats could be because: “Local financial advisors hope to continue earning a healthy return on investment for as long as the funds remain put,” says Tax Consulting SA. So, what’s at stake should expats wish to consider making a withdrawal from the scheme? Here are three things to consider …
1. EXCHANGE RATES
Depending on where you’re now based, two-pot retirement for South African expats is all about the exchange rate you’ll get. At the moment, the rand/dollar exchange rate is at its best levels in a year. If the market is in your favour at the time of withdrawal you stand to make a lot of money, says Tax Consulting SA.
2. LOCK-IN RULE
South African expats are permitted to make one withdrawal from their savings ‘pot’ per tax year – 1 March and 28 February. As for the three-year lock-in rule – which came into effect in March 2021 – non-tax residents cannot withdraw money from their preservation fund for three consecutive years. However, there is a legal process to back-date your financial emigration, but it is not an easy process through SARS, explains Tax Consulting SA.
3. SARS TAX COMPLIANCE
Another thing to remember is that making a withdrawal from two-pot retirement for South African expats will trigger a compliance check. This is to ensure that your employer has been contributing to your retirement fund. This occurs because the Financial Sector Conduct Authority (FSCA) found recently that thousands of employers have not been making retirement fund contributions for expat employees.
As a result, any non-compliance in the eyes of SARS will lead to a hefty penalty deduction from the withdrawal amount.
ARE YOU AN EXPAT HOPING TO TAKE MONEY OUT?
Note, this article is for informational purposes only and should not be construed as financial, tax or legal advice. For further details on two-pot retirement for South African expats contact a two-pot tax specialist. Also, click on the comment tab below or by emailinginfo@thesouthafrican.com. You can also send a WhatsApp to 060 011 0211. Don’t forget to follow @TheSAnews on X and The South African on Facebook for the latest social media updates.
