South Africans looking for tax-efficient retirement planning solutions have an array of offshore investment options available to them – but it’s important to choose the right investment vehicles, and to choose reputable financial advisors with a sound track record.
That was the key message to emerge from Sovereign Trust SA’s fifth annual International Retirement Seminar, held in Johannesburg and in Cape Town last week. The seminar brought together a range ofexperts in the field of offshore retirement planning, including financial advisors and family trust lawyers who counsel clients on international pension planning and pension structures.
Joanne Baynham, director and head of investment strategy at MitonOptimal SA, set the scene for the seminar with an incisive overview of the global economy – which is growing, but slowing, with looming trade wars worrying investors. She believes the table is set for the return of inflation, although still not runaway, and a measure of tightening that will cause volatility and equity market weakness. Worrying for South African investors, she believes that technically, the US Dollar could get stronger.
Not surprisingly, several of the speakers to follow Ms Baynham highlighted the importance of offshore investing as a hedge against the volatile Rand, with South Africa’s declining currency offering little in the way of a protected future lifestyle. Thanks to relaxed foreign exchange control legislation in recent years, South African investors should look to use the Reserve Bank’s R10 million foreign investment allowance to diversify more freely into other markets, currencies and opportunities, and thus to hedge against currency risk and secure more stable retirement funding.
Tim Mertens, the chairman of Sovereign Trust SA, said that in spite of the looming threat of Brexit, and more aggressive UK tax legislation, buying property in the UK remains a sound retirement planning option, especially when done through vehicles like Qualifying Non-UK Pension Schemes (QNUPS).
Richard Neal, a director at Sovereign Trust SA, highlighted the benefits of Guernsey’s so-called ‘40(ee)’ international retirement plans, which allow international Guernsey-based Retirement Annuity Trust Schemes to make payments to non-Guernsey resident individuals without deduction of any Guernsey tax. Together with flexible payment options, this makes ‘40ee’ international retirement plans ideal for South African expats, wherever they happen to be living or working. The topic of pensions was also high on the agenda. Sean Gillease, the business development manager for Sovereign Trust in the Channel Islands, offered an overview of international corporate pension plan options for South African nationals employed outside the country, while Matt Tailford, a director in Sovereign’s Dubai office, discussed key considerations for British expats and returning South Africans with regard to UK pensions.