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When members change jobs or countries: questions consultants should table before the exit pack

Industry pre-flight questions before exit-pack sign-off — Reg 38 paid-up defaults and current SARS rails.

Topics · ~9 min · Education only

Job change: Reg 38 paid-up default, certificate timing, fee equality

For employer-fund exits in scope, Regulation 38’s default is paid-up membership until the member gives a written instruction to pay or transfer. Forced cash-out language does not belong in the pack.

A paid-up membership certificate is due within two calendar months of the fund knowing the member left. Investment fees on the default portfolio may not differ solely because the member is paid-up; administration fees must be fair, reasonable and commensurate; and no initial once-off charge may be levied as a direct consequence of becoming paid-up.

Counselling before withdrawal or transfer — and inbound portability duties

Paid-up class rules must give members access to retirement benefits counselling before any withdrawal benefit is paid or any transfer to another fund. Counselling is not product advice and not a FAIS recommendation from this desk. Point to portfolios, annuity-strategy terms, and Reg 38 preservation handling without inventing a second counselling definition.

Receiving employment funds: within four months of joining, request the list of paid-up certificates; where the member elects transfer in, arrange transfer without levying a charge on those amounts for the transfer (Reg 38(1)(e)). RA and preservation funds sit under Reg 40 carve-outs for Regs 37–38 — record scope.

Country moves: current SARS tax-directive rails (not obsolete emigration wording)

From 1 September 2024, SARS does not accept “Emigration Withdrawal” as a tax-directive reason. Cross-border access, if any, runs through current cease-to-be-resident and visa-expiry rails — with tax-residency facts for licensed tax advice, not HR conjecture.

Cease-to-be-resident pathways reference an uninterrupted period of three years or longer as described in the SARS guide. Recognition of Transfer (ROT) is a process dependency between transferring and receiving administrators — name it without promising tax-free outcomes. This note does not determine whether a person has ceased tax residence.

Separate fund benefits from employer risk and medical — confirm with contract

Fund benefits are not the same as employer risk benefits or medical scheme membership. List only what this fund or employer actually sponsors. Mark everything else “confirm with insurer/scheme.”

We do not invent group-risk continuation windows, medical-scheme waiting periods, or exchange-control / authorised-dealer playbooks as statutory fact. Those stay unverified without policy, CMS, or other primary — ask as questions only. This is an industry desk note, not a consumer leaving-SA checklist.

Checklist — questions before exit-pack sign-off

• Pack states paid-up default (not forced cash) until written pay/transfer instructions (Reg 38(1)).
• Paid-up membership certificate within two calendar months of the fund knowing of exit; expected fields described.
• Paid-up investment and administration fees aligned with Reg 38(1)(c)–(d): no punitive once-off for becoming paid-up; admin fees fair/commensurate; default-portfolio investment fees not worse solely for paid-up status.
• Pack points to retirement benefits counselling before cash withdrawal or transfer — portfolios, annuity-strategy terms, Reg 38 preservation handling.
• Receiving employment funds: four-month paid-up certificate request; no transfer charge on elected inbound transfers (Reg 38(1)(e)).
• Country moves: no obsolete “emigration withdrawal / SARB-recognised emigration” directive language; flag current SARS cease-to-be-resident / visa-expiry rails; three-year and residency facts for licensed tax advice.
• ROT named as a process dependency between transferring and receiving administrators — without promising tax outcomes.
• Fund benefits separated from employer risk benefits and medical scheme membership; only what this fund/employer sponsors listed; everything else marked “confirm with insurer/scheme.”

Questions to table (industry desk only; no member how-to)

• Does the pack state paid-up default until written pay/transfer instructions — not forced cash-out?
• Will the paid-up certificate issue within two calendar months of the fund knowing of exit?
• For country moves: has obsolete emigration-directive language been removed in favour of current SARS rails?
• Are ROT responsibilities named without promising tax outcomes?
• Ask contract / CMS / licensed tax advice for risk continuation, medical waiting periods, exchange-control steps, and tax-residence facts — unverified as statutory windows here; not a consumer leaving-SA guide.