Thanks for your question.
If I understand you correctly, you will definitely leave the country before December 2021, to live and work elsewhere. You have a retirement pension and you want to cash it out before you turn 55 to take the funds with you. You do not indicate if you have already completed the formal / financial emigration process with the South African Reserve Bank (Sarb). I will deal with this part of your question first.
Before March 1, 2021, you could not access your retirement pension unless you were 55 years old, the fund was worth less than R7,000, you became physically disabled, or you went through the formal emigration process / financial with Sarb.
As of March 1, 2021, the Sarb financial / formal emigration process no longer exists, unless your request to the Reserve Bank has been received by February 28, 2021.
The law now stipulates that anyone who wishes to access their retirement pension can only do so if they have reached the age of 55, the value of the fund is less than R 15,000, they become permanently disabled or if they has been a non-resident of the South for African tax purposes for a period of three consecutive years from March 1, 2021. If you were a non-resident for tax purposes from March 1, 2018 to March 1, 2021, you will already be able to withdraw your retirement pension in advance, in the form of capital.
This last part is an important change for people who are planning to leave the country or who have already left the country.
If you wish to access your retirement pension, and the other provisions do not concern you, you can no longer follow the formal / financial emigration process with the Reserve Bank, you must have been a non-resident for tax purposes South Africa, for a period of at least three years.
For example, if you decide to leave South Africa and settle in Australia permanently, you should in theory be able to terminate your South African tax residency on the day you leave the country. You will then have to wait three years after this date to be able to access your retirement pension, at which date you will be able to liquidate the full value of the fund and will be liable for the applicable withdrawal taxes.
In your case, if you had not already requested before or on February 28, 2021 the formal / financial emigration process with the Sarb, you will have to wait until your 55 years old to claim your retirement pension. If the value of your retirement pension is less than R247,500, you will be able to access the full amount, less any taxes that may be due. If the value is greater than R247,500, the one-third / two-thirds principle would apply, whereby you can withdraw one-third in cash once applicable taxes have been paid and invest the balance for monthly income in a form of annuity.
As a summary of the above paragraph, if you have already reached the age of 55, the three-year waiting period does not apply to you. At this point, however, you will be limited to taking one-third of taxable cash and two-thirds will need to be invested in an annuity to provide monthly income. If the amount available is less than R247,500, the full amount may be withdrawn subject to tax, if applicable.
If you have already completed the formal / financial process with Sarb, then you can withdraw your retirement pension before the age of 55.
The early withdrawal of your retirement pension will be subject to tax at a much higher rate than if you had made the withdrawal after retirement, while the cessation of tax residence is accompanied by a deemed capital gains tax. .
You asked if it would be a good idea to stop your premiums so that you can offset any penalties for early retirement. The penalties vary depending on whether your retirement pension is an old type of retirement pension or if you have converted it to a new type of retirement pension. The new type of retirement annuity has a very small penalty for early retirement. Rather, I would advise you to continue paying your premiums for as long as you can.
Be sure to contact a qualified counselor who can expertly serve you during this phase of your life. Good luck and all the best for you in this new phase of your life.