Total Contributions
R 75 000,00
Tax Deductible Amount
R 75 000,00
Estimated Tax Saving
R 23 250,00
Since 1 March 2016, contributions to pension funds, provident funds, and retirement annuity funds are treated uniformly for tax purposes.
The deductible amount is limited to 27.5% of the greater of remuneration or taxable income, subject to an annual cap of R350,000.
Employer contributions are a taxable fringe benefit but qualify for the same combined deduction. Non-deductible amounts carry forward to future years.
How much can I deduct for retirement fund contributions?
You can deduct up to 27.5% of the greater of remuneration or taxable income, capped at R350,000 per year. This applies to contributions to pension funds, provident funds, and retirement annuity funds combined.
What is the difference between a pension fund and an RA?
A pension fund is employer-sponsored and contributions are deducted from your salary. A Retirement Annuity (RA) is a personal retirement fund that anyone can contribute to, including self-employed individuals.
Are employer contributions taxable?
Yes, employer contributions to your retirement fund are included in your taxable income as a fringe benefit, but you then get the tax deduction for the total contribution (employee + employer) up to the limit.
What happens if I contribute more than the limit?
Contributions exceeding the 27.5% or R350,000 limit are not deductible in the current year but can be carried forward to future years. On retirement, excess contributions that were not deducted are not taxed again.
How retirement savings work, the tax benefits, and what happens when you withdraw
What types of retirement funds exist in South Africa?
There are three main types: pension funds (employer-sponsored, historically used by salaried workers), provident funds (employer-sponsored, historically for blue-collar workers), and retirement annuity funds (for self-employed people or as an additional personal fund). Since 2016, the tax treatment of all three has been aligned — contributions to any of them are tax-deductible.
How much can I contribute tax-free?
Contributions to retirement funds are tax-deductible up to 27.5% of your remuneration or taxable income (whichever is higher), with an annual cap of R350,000. If you earn R500,000 per year, you can contribute up to R137,500 tax-free. At a 36% marginal rate, that saves you R49,500 in tax. Contributions above the limit carry forward to future years.
What is the two-pot retirement system?
From 1 September 2024, retirement funds are split into two pots. One-third of contributions go into a savings pot (accessible during employment), and two-thirds go into a retirement pot (only accessible at retirement). You can withdraw from the savings pot once per tax year, with a minimum of R2,000. This gives you access to some savings during emergencies without cashing in your whole retirement.
How are retirement withdrawals taxed?
Withdrawals before retirement are taxed on a sliding scale: the first R25,000 is tax-free (lifetime), R25,001 to R660,000 at 18%, R660,001 to R990,000 at 27%, and above R990,000 at 36%. At retirement, the first R550,000 is tax-free, then the same rates apply. Savings pot withdrawals are taxed at your marginal income tax rate.
What happens to my retirement fund if I change jobs?
When you leave an employer, you can transfer your retirement fund to a preservation fund (no tax), transfer to your new employer's fund (no tax), or cash it out (taxed at withdrawal rates). Cashing out is usually a bad idea — you lose a large chunk to tax and lose the compound growth. A R500,000 cash-out could cost R85,500 in tax (after the R25,000 exemption).
How much should I save for retirement?
Financial planners in South Africa recommend saving 15% of your gross salary throughout your working life to retire comfortably. If you start at 25 and retire at 65, saving R5,000 per month at 10% annual growth accumulates roughly R31 million. Starting at 35 requires R12,000 per month to reach the same target. The earlier you start, the less you need to save each month.
What is a retirement annuity (RA)?
A retirement annuity is a personal retirement fund you manage yourself through a financial services provider. It is ideal for self-employed people, freelancers, or employees who want to save beyond their company fund. You can contribute any amount (tax-deductible up to the 27.5% limit) and choose your own investment portfolio. You can only access it from age 55.
Can creditors access my retirement fund?
No. Retirement funds in South Africa are protected from creditors under the Pension Funds Act. If you are sequestrated (declared bankrupt), your retirement savings cannot be seized to pay debts. This is a powerful reason to keep money in a retirement fund rather than cashing out — it is safe from lawsuits and insolvency. Once you withdraw, that protection is lost.
SARS-Aligned: Based on 2025 SARS rates and thresholds. For personal advice, speak to a qualified tax practitioner.
Disclaimer: This calculator provides estimates based on current HMRC rates and thresholds for the 2025/26 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified accountant or tax adviser before making financial decisions. Read our terms
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