Laws around RA in South Africa

[percival1994]

Hi all,

Done a fair amount of research but hoping for some good opinions and caveats here.

1. What are the laws around imigration and RA's in South Africa w.r.t to taxes and fees (though these are mostly specific to the company you're with)? Must it be set up to transfer into a new RA fund at your destination?
2. Would you invest in an RA in South Africa? Given the state of things and a 30 year outlook on growth in a RA account with its holding percentages being largely focused on SA?
3. Any particular companies who stand out as longterm secure entities (30+ years) with which to open a RA? I'm looking at Sygnia...

Answers to any/all of the above would greatly help me in my decision.
Thank you.

 

[lostandtired]

@percival1994 I would consider speaking with a tax practitioner regarding the tax implications of financially emigrating. This has been a very contentious point between SARS and citizens.

If you wish to financially emigrate, you have to notify SARS of your non-residency and wait the alloted 3 years thereafter in order to have access to these funds. I believe you are able to reinvest this amount into a local investment vehicle.

Yes, I most certainly would. Retirement Annuities are one of the best savings and tax saving vehicles there are in South Africa. What may deter people is the amounts one can invest in certain onshore and offshore asset classes, as set out by Regulation 28.

Companies that have many years of good service and a name backing themselves would be comanpies such as Absa (Absa Investment Management Services), Sanlam or Old Mutual.

 

[nonoza123]

@percival1994 I would definitely rather consult an expert on this. The laws have also recently changed regarding how much you can invest, how many RAs you can have, and how much your are taxed at various withdrawal phases

 

[james123456]

@percival1994 ETFSA offers RAs. The underlying instruments are quite diversified and not completely South African focused. You can also withdraw it and put it into another RA if you wish.

 

[twinmum]

@percival1994 Yes, contact a tax practitioner to help you with this.Consider sygnia, 10x or possibly outvest as possible low cost options. Have you maxed out your TFSA? That would be the number 1 priority.
I have been an expat for over 6 years and lived all around the world but I always have hope to one day come home for retirement.Nothing better than a lekker braai and Castle under the African sky .

 

[ruien2]

@percival1994 Pretty sure it’s only accessible 3 years after you have tax emigration status. But I agree, consulting someone that’s authorised to give this advice would be best. Even a financial advisor would point you in the right direction.

 

[christian1991]

@percival1994 If youre planning to emigrate then avoid RAs....why tie your money in SA when you can invest offshore rather.

 

[gifford26]

@percival1994 An RA is never a bad idea for anyone. Sanlam has one called Echobonus where they match your contributions. You have to stick to the fund rules, one of them being that you can only withdraw at 55.
You can however access the funds if you have maintained tax immigration status for three years and filed returns as such.

 

[percival1994]

@gifford26 Wow that sounds like a very good deal... That effectively means you start at 200% ROI?

 

[gifford26]

There are rules to it (which I’m sure is the reason I’m getting downvoted) but I pay a paltry 500bucks a month into it and get extra contributions and the tax break, so I do it.
I have my preservation fund (from when I resigned) with NinetyOne because it performs really well, and my private with PPS.
So I effectively have 3. The fee is low with the group fund, because of the sliding scale of fees charged by our advisor.
The other two have such minimal fees.

Your interest only vests when the amount is paid out (at retirement) so you will not have any financial implications on a tax return, unless you decide to claim the deduction. You can’t claim the deduction if you have no income so basically you’ll lose out on the 27.5% of your contributions that you would’ve been entitled to claim.

Regulation 28 has been changed recently to include more offshore investment allowances. We have some award winning fund managers in South Africa and I’d place my trust in a number of them.