Offshore retirement plans: Should retirement savings go offshore?

In this episode of Everything Counts with host Motheo Khoaripe, Investec’s Kate Robson (co-head of My Investments) and Johan Loubser (head of adviser enablement) unpacked this complex but important topic.

Why offshore investing matters

Offshore investing simply means putting some of your money into assets outside South Africa. At its core, it’s about diversification − spreading your risk across different geographies, asset classes and currencies.

While many think offshore investing is only for the ultra-wealthy, the reality is different. With feeder funds denominated in rands and annual allowances that let you move money abroad, it’s far more accessible than most imagine.

Offshore retirement: two paths

The key question is not just how you invest, but also where you plan to retire.

• Retiring in South Africa: You’ll likely spend most of your income in rands, but having offshore exposure protects you against local economic and currency volatility.
• Retiring abroad: You’ll want to build up savings in the currency of your destination − dollars, pounds or euros − to match your future spending.

The golden rule: first ensure you’re saving enough for retirement. Then, with the right advice, decide how offshore investing fits into your bigger financial picture.

Tax and regulation: what to know

Every South African adult can move up to R1 million per year offshore through the Single Discretionary Allowance. Beyond that, the Foreign Investment Allowance allows up to R10 million more, subject to tax clearance.

Once invested offshore, your growth is taxed much like it would be locally − on capital gains, interest or dividends. But offshore assets also come with estate planning considerations. Winding up offshore investments for heirs can be complex, which is why expert advice is key.

Offshore retirement plans: Balancing risk and reward

Like all investments, offshore exposure has trade-offs.

• Rewards: Access to global markets, companies, and currencies, reducing reliance on the South African economy.
• Risks: Currency fluctuations can work against you if your future spending is in rands but your assets are in dollars.

The episode’s biggest takeaway? Offshore investing isn’t “all or nothing” proposition. The right mix depends on your goals, time horizon and retirement plans.

Key terms to understand

• Diversification: Spreading investments across asset classes, industries or regions to reduce risk. Learn more.
• Feeder fund: A rand-denominated fund that invests into an offshore fund, giving exposure to foreign markets without needing to convert rands directly
• Single Discretionary Allowance (SDA): The annual limit (R1 million) South Africans can transfer offshore without tax clearance
• Foreign Investment Allowance (FIA): An additional allowance (R10 million) to externalise funds with tax clearance
• Regulation 28: A rule limiting how much retirement funds can invest offshore (currently up to 45%)
• Estate planning: Preparing for how your assets are handled and passed on after death, locally or offshore

Offshore investing isn’t about chasing trends or copying what others are doing. It’s about aligning your savings with your future life goals. Whether you dream of retiring internationally or locally, the right balance between local and offshore investments can help you protect your savings and make your money work across borders.