This article explains the three-year non-residence rule, which retirement funds may be affected, potential tax implications, when to start planning and the factors to consider before deciding whether to transfer your pension or leave it invested in South Africa.
Retirement annuities, preservation funds and other retirement products are governed by South African legislation, regardless of where you choose to live. If you move permanently to the UK, Australia or another country, any retirement savings remain invested in South Africa for several years after your arrival due to rules around financial emigration from South Africa.
Understanding when those funds can be accessed, what options are available and how they fit into your wider retirement plans is an important part of financial planning after emigration. This article looks at the rules around South African pensions when you relocate abroad and evaluates the potential options available to you. While it doesn’t provide advice, this article should help provide clarity around everything before getting advice.
It has been written in partnership with the Alexander Beard Group who assist South African’s emigrating from South Africa and should be read along with our more detailed article which looks at financial planning for South African expats.
This article is intended as a general guide only and should not be considered financial, pension or tax advice. The rules governing South African retirement products, tax residency and access to retirement benefits can be complex, while the tax treatment of withdrawals may also depend on the rules in your country of residence and any applicable double taxation agreement. Before transferring, withdrawing or restructuring retirement savings, consider taking advice from a suitably qualified specialist who understands both South African requirements and the rules in the country where you now live.
South African retirement annuities and preservation funds cannot simply be transferred to another country because you have become resident overseas. Instead, access to these products is governed by South African retirement legislation and tax rules.
Since the changes introduced in 2021, individuals generally need to have ceased South African tax residency and remained non-resident for at least three consecutive years before certain retirement interests may potentially be accessed before normal retirement age.
This means relocating overseas and transferring retirement savings are often two separate events, sometimes years apart.
The three-year rule was introduced when South Africa changed its financial emigration system in 2021. Previously, access to certain retirement funds following emigration was linked to having your emigration formally recognised by the South African Reserve Bank.
That process was replaced with a test based on tax residency which meant that, to access certain retirement benefits before retirement because you have left South Africa, you now need to demonstrate that you have been non-resident for an uninterrupted period of at least three years.
The purpose of the waiting period is essentially to establish that the change in residency is sufficiently settled, rather than allowing retirement funds to be accessed because of a temporary period living overseas. National Treasury specifically cited the need for enough time for the person's emigration position to be established with certainty when the rule was introduced.
The three-year rule does not apply in exactly the same way to every retirement fund or every component within a fund, particularly following the introduction of South Africa's two-pot retirement system in 2024. The specific product and components you hold therefore need to be checked before assuming that you either can or cannot access them.
The three-year period is based on when you ceased to be a South African tax resident, not simply when you physically left South Africa.
Which means that the date you boarded a flight, started a new job overseas, received a visa or told your pension provider that you had moved does not necessarily determine when the three-year period begins.
Instead, you need to establish the date from which you ceased being resident in South Africa for tax purposes. SARS may also require evidence supporting this date when you subsequently apply to access qualifying retirement benefits.
If you have already been living abroad for several years but have never formally considered your South African tax residency position, it is worth establishing this before assuming that you have already satisfied the three-year requirement.
This is also a good reason not to wait until you want to access your pension before reviewing your position. Confirming your tax residency status and ensuring SARS has the correct information can help identify any issues well before you intend to withdraw and transfer retirement funds.
The three-year rule is particularly relevant for:
Other retirement arrangements, including employer pension funds already in payment or compulsory annuities, may be subject to different rules.
Understanding exactly which products you hold is an important first step before making any decisions.
For anyone planning to remain abroad, the waiting period is often used to review how retirement savings should be managed rather than simply waiting for the three years to pass.
Questions you should ask as part of your planning include:
These are investment decisions rather than administrative ones, and they can have a significant impact on long-term retirement outcomes.
There isn't a generic "early transfer penalty" simply because you act at the end of the three-year period. But accessing retirement savings before normal retirement can create a significant tax cost.
For the 2026/27 South African tax year, pre-retirement lump-sum withdrawals are taxed under the withdrawal table, with rates rising to 36%. Crucially, SARS calculates retirement lump-sum taxation cumulatively. A withdrawal today can therefore affect the tax calculation when you take other retirement lump sums later.
The three-year rule does not mean you should leave your South African retirement planning untouched for three years and only start looking at your options when the three years is up.
If moving eligible retirement savings overseas is part of your long-term plan, the period before you can access them gives you time to establish your South African tax residency position, make sure your tax affairs are up to date and understand exactly which retirement products you hold and which rules apply to them.
It is also an opportunity to consider what you could do with the money if and when it becomes accessible.
That includes understanding the tax payable on a withdrawal, how the money would be taxed in your new country of residence, whether transferring it is financially worthwhile and how it would fit alongside pensions and investments you have built since leaving South Africa.
There will also be documentation to deal with. Your retirement fund will need to obtain the appropriate SARS tax directive before paying a qualifying lump sum, and evidence of your overseas tax residence may be required. Depending on the size and nature of the subsequent international transfer, further tax compliance requirements may also apply.
Planning early does not commit you to transferring your pension. It means that when you become eligible, you can make the decision based on the tax, investment and retirement consequences rather than simply starting the process from scratch.
Becoming eligible to access retirement savings does not automatically mean transferring them is the right decision. The best answer for your circumstances will depend on a range of factors, including:
For someone intending to remain overseas permanently, consolidating retirement savings may form part of a long-term financial plan. If you were planning to return to South Africa in the future, retaining some retirement assets in South Africa may continue to make sense.
The decision should be based on your short and long-term financial objectives and future living plans rather than simply the fact that a transfer has become possible.
South African retirement withdrawals remain subject to South African tax rules, and the country in which you are now tax resident may also have rules governing how those funds are treated.
Where a double taxation agreement exists, this may influence which country has taxing rights or how relief is provided.
Because the interaction between two tax systems can become complex, pension withdrawals are often considered alongside wider tax and retirement planning rather than in isolation.
Moving abroad also means building retirement savings in a completely different system because different countries have their own retirement structures and tax incentives. For example, someone living and working in the UK may begin contributing to workplace pensions or a Self-Invested Personal Pension (SIPP). Someone living in Australia may build superannuation.
When living abroad it’s common for retirement planning to develop across two jurisdictions for a period of time, with legacy retirement savings remaining in South Africa while new retirement wealth is built elsewhere.
Looking at both systems together can help ensure retirement planning remains aligned with your long-term goals.
Several issues regularly delay or complicate retirement planning after emigration.
These include:
Taking time to understand how the different parts fit together often leads to better long-term decisions.
Whether transferring South African retirement savings makes sense depends on what you are trying to achieve because two people with similar pensions could reasonably reach completely different decisions.
Consider someone who left South Africa in their early 40s and has now been living and working in the UK for several years. They own a home in the UK, expect to retire there and have started building retirement savings through UK pensions.
They also have a retirement annuity remaining in South Africa.
Once eligible to access the South African retirement funds, they decide to transfer the available capital overseas. Before doing so, they consider the South African tax charge on accessing the money and how the funds will be treated in the UK.
For them, the transfer forms part of a wider plan to have more of their retirement wealth aligned with the country and currency in which they expect to spend their retirement. It also reduces the amount of their long-term wealth dependent on the rand and allows their South African and UK retirement assets to be considered as part of the same financial plan.
Now consider someone who has moved overseas but isn't certain where they will eventually retire.
They may remain abroad, return to South Africa or potentially move to another country later in life. They have become eligible to access their South African retirement savings, but there is no immediate need for the money.
Rather than transferring simply because they can, they decide to leave the retirement funds invested in South Africa while continuing to review their position.
Keeping the funds in South Africa preserves part of their exposure to the rand and avoids making an irreversible decision based on a retirement plan that has not yet been decided.
In both cases, the decision about transferring the South African assets is based on whether the transfer would support the person's retirement plans.
Once the proceeds are overseas, your options depend on where you live and your wider financial plans.
You could invest the money, hold some as cash, use it towards property or incorporate it into your retirement planning in your new country. However, you should not assume that money withdrawn from a South African pension can simply be paid straight into an overseas pension.
For example, UK pension contributions are subject to contribution and tax-relief rules, while Australia has its own rules governing contributions to superannuation.
This is why it is useful to get cross-border advice, rather than just advice from a South African specialist. This will help you decide what to do with the money before withdrawing it from South Africa, rather than transferring it first and planning afterwards.
You do not need to wait until your South African retirement funds become accessible before getting advice. In fact, if you’re leaving South Africa getting advice earlier gives you more time to understand whether a transfer is likely to be appropriate and what needs to happen before you become eligible.
Once you’ve been living broad for a while, formal advice becomes particularly important when you are approaching the end of the three-year period, deciding whether to access a retirement fund, or considering what you would do with the proceeds once they are transferred.
At that stage, the decision can involve South African tax, the tax rules in your current country of residence, investment choices, currency exposure and your wider retirement plans. It may also involve advisers in more than one jurisdiction.
An adviser will need a clear picture of both your South African retirement arrangements and your plans overseas before they can make a recommendation.
It’s best to not make a pre-determined decision before getting advice, and establishing whether you should transfer, leave the funds in South Africa or take another approach should be part of the overall advice.
Planning retirement across two countries often involves more than understanding South African pension rules.
Experts for Expats can introduce you to specialists who advise on South African retirement products, cross-border financial planning and the pension systems in your new country of residence.
Whether you're preparing to leave South Africa, have recently relocated or are approaching the point where your retirement savings become accessible, we can help you find an adviser who understands the financial considerations involved in managing retirement across international borders.
