Emigration for greener shores is a constant conversation in South Africa these days. Importantly, it is a topic soon-to-be retirees may need to focus on. Specifically, new tax regulations will affect them. And, the exchange rates don’t help.
Tax regulations on retirement funding
Importantly, the latest Draft Tax Law Amendment Bill affects retirement funding. Currently, retired South Africans may remove retirement funding from South Africa. Unfortunately, according to an article in BizNews today, in future, retirees must prove non-residency for tax purposes for three continuous years. Moreover, failure will result in pension money staying in South Africa.
Understandably, soon to be retirees are especially concerned. Firstly, the value of funds is shrinking against the USDollar. Secondly, moving the money to a more stable currency is no longer an easy option.
Emigration enquiries increase
Increasingly, emigration enquiries from South Africans cite instability of the SA Rand as a concern. Additionally, global economies offer work and stability. Importantly, the new tax regulations, in addition to current onerous retirement regulations, will spur more emigration of skills.
‘What must be done to face economic reality?’ – Jonathan Katzenellenbogen
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— Daily Friend (@DailyFriendSA) September 23, 2020
Can SA rethink tax and retirement policy?
Furthermore, experienced South African retirees, instead of being retained as mentors will now financially emigrate taking skills and funds with them. Interestingly, The Netherlands encourages retirees to upgrade their skills upon retirement. Thereafter, retirees return to the workforce as mentors for several more years passing on skills and experience. Importantly, South Africa could benefit from similar planning.
Interestingly, the University of the Third Age (U3A) is a model South Africa’s education department could tap into and develop. Currently, retired professors and lecturers offer talks on various subjects. Undoubtedly, talent amongst retirees may be persuaded to assist in mentoring the unemployed in small business enterprises. Possibly, the government could supplement retirement funding to this end through the Skills Development Levies.
Emigration not easy
Emigration is never easy. Importantly, South Africa needs some fast footwork to encourage skills to stay. Targetting retirement funding probably won’t help that.
What do you think? Have your say.