Guernsey – a port in a storm for beleaguered SA investors

South African taxpayers are increasingly looking to invest overseas in order to protect their assets against a weakening currency, geopolitical uncertainty and a growing tax burden at home. The Channel Island of Guernsey has emerged as one of the leading overseas destinations.

Guernsey’s so-called ‘40(ee)’ international retirement plans offer a range of retirement planning and other benefits that make them ideal for internationally mobile South Africans, wherever they happen to be working or living.

The plans are named after Section 40(ee) of the Income Tax (Guernsey) Law, which allows Guernsey-based Retirement Annuity Trust Schemes (RATS) that are open to non-Guernsey resident members to make payments to non-Guernsey residents without deduction of any Guernsey tax.

“Many South Africans still find the idea of saving and investing offshore a bit daunting. Investing through a 40(ee) retirement plan can make offshore investing simpler and more accessible, and offers additional benefits such as capital security, tax efficiency and sound succession planning,” said Bryony Oostingh, a consultant at Sovereign Trust (SA) Limited.

Sovereign’s own multi-member 40ee plan – branded as the Conservo International Retirement Plan – is an effective retirement planning and diversification tool that is particularly suited to the needs of South Africans. Unlike traditional pension schemes, there is no centralised pot of funds; members’ retirement funds are instead held solely for their own benefit in a trust-based structure.

The Conservo Plan is typically funded by either a cash contribution or the transfer of existing assets to the retirement plan. These assets can be in the form of anything from cash to investments, and in certain circumstances more bespoke assets such as artworks or even shares in underlying private companies. There is no limit to the level of contributions or to the fund size, and payments can be made in any recognised currency and at any time, typically as ad hoc lump sum payments.

The assets held in a Conservo Plan are free from income tax and capital gains tax (CGT) in Guernsey, so the growth on investments can be optimised. And in certain circumstances there can be tax efficiencies in South Africa when benefits are paid to a South African resident Member.

Another major selling point is the Conservo Plan’s flexibility in terms of benefit payment. Since there is no actuary dictating how much the member is allowed to withdraw, they can withdraw the full amount as a single lump sum distribution if they choose after the age of 50, although staged ad hoc withdrawals are favored. Members can also take a loan of up to 50% of the fund value before they are 50, should there be call to do so

The Conservo also offers a range of succession benefits. Upon the death of a member, the trustee can pay the balance of the funds to their estate and/or to the member’s dependents, relations or other individuals, as nominated by the member.

“We’ve long been encouraging South Africans to make use of the SA Reserve Bank’s generous R10 million foreign investment allowance to diversify their estates and gain offshore exposure,” said Oostingh.

The Conservo International Retirement Plan offers the following benefits to South African taxpayers:

  • Assets are held in a jurisdiction which is less afflicted by political and economic turmoil, while they enjoy tax-free growth.
  • Contributions can be made, regardless of where in the world the member is based.
  • Contributions are very flexible and can be tailored – increase, decrease, ad hoc deposits or cease contributions – to fit a member’s current personal circumstances.
  • Retirement benefits may be accessed from age 50.
  • If structured correctly, the plan can have succession planning efficiencies.
  • Assets are protected from creditors and can transfer seamlessly to nominated beneficiaries on a member’s death without the time and financial cost of probate.


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