Withdrawing Your Retirement Annuity After Emigration: The SA Tax Rules

You can withdraw the full value of a South African retirement annuity (RA) once you have ceased to be a South African tax resident and have then remained a non-resident for an uninterrupted period of three years or longer. This rule took effect on 1 March 2021. The payout is a lump sum taxed on the pre-retirement withdrawal table, and the fund cannot pay you until SARS has issued a tax directive.

Before that three-year mark you generally cannot access the RA early. After it, you elect to withdraw the full benefit rather than being forced to retire from the fund and take an annuity.

The three-year non-residence rule

With effect from 1 March 2021 the definitions of "retirement annuity fund", "pension preservation fund" and "provident preservation fund" were amended. A member who has ceased to be a South African tax resident, and who has remained a non-resident for an uninterrupted period of three years or longer, may withdraw the full benefit before electing to retire from the fund.

Two points matter for the timing:

• The three years run from the date you ceased tax residency, not from the date you physically left.
• The rule applies even if you ceased residency before 1 March 2021, provided the three uninterrupted years as a non-resident are met on or after 1 March 2021.

This tax test replaced the old formal (financial) emigration route through the South African Reserve Bank, which was phased out from 1 March 2021. The trigger moved from exchange control to tax residency. The old "Emigration Withdrawal" directive reason fell away, and withdrawals now use the "ceased to be resident" route instead.

If you are still working out whether and when you actually broke tax residency, read our explainer on how ceasing tax residency in South Africa works.

How the withdrawal is taxed

The early withdrawal is a lump sum benefit. It is taxed on the pre-retirement withdrawal table below, not on the more generous retirement table, and it aggregates with any prior withdrawal lump sums you have taken.

Taxable lump sum	Rate
R0 – R27,500	0%
R27,501 – R726,000	18% of the amount above R27,500
R726,001 – R1,089,000	R125,730 + 27% of the amount above R726,000
R1,089,001 and above	R223,740 + 36% of the amount above R1,089,000

The R27,500 taxed at 0% is a once-off cumulative amount across all withdrawal lump sums in your lifetime, not an annual allowance. If you have drawn a lump sum before, you will not get the full R27,500 again.

South Africa taxes the withdrawal because the fund is South African-sourced. A double tax agreement between South Africa and your new country of residence may affect where the lump sum is ultimately taxed and can relieve double taxation, so it is worth confirming which country holds the taxing right before you draw.

Worked example: a R900,000 withdrawal

Assume you have been a non-resident for the required three years, you withdraw an RA worth R900,000, and you have taken no prior withdrawal lump sums.

R900,000 falls in the R726,001 – R1,089,000 band. The tax is:

1. Base tax for the band: R125,730
2. Plus 27% of the amount above R726,000: R900,000 − R726,000 = R174,000
3. 27% × R174,000 = R46,980
4. Total tax: R125,730 + R46,980 = R172,710

That leaves R900,000 − R172,710 = R727,290 in hand before any fees and before any treatment in your new country.

Note what the R27,500 0% band did here: it is already built into the R125,730 base figure, so you do not subtract it again. If you had taken an earlier withdrawal lump sum, that earlier amount would be added back when SARS calculates the tax, which usually pushes the current withdrawal into a higher band. You can model different amounts with our retirement lump sum calculator.

What the exit charge does and does not touch

Ceasing tax residency can trigger the section 9H exit charge, a deemed disposal of your worldwide assets on the day you stop being a resident. A retirement fund interest is treated under the three-year withdrawal provision described above, not under the section 9H deemed disposal, so the RA itself is not caught by the exit charge. For how ceasing residency affects the rest of your tax position, see our expat tax and foreign income exemption guide.