Tax Corner

Here is some important information that you need to know about tax.
PLEASE NOTE: This is not tax advice. You are advised to get expert financial advice or contact SARS for guidance regarding your tax.
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Tax and your retirement fund contributions

Compulsory Contributions

Your compulsory pension fund contributions are deducted from your salary before any tax is deducted.
For Example:
  • Zola earns a gross salary of R10 000 per month.
  • Zola contributes R750 and Woolworths contributes R1 050 towards her pension fund.
  • Assuming that there are no other deductions, the diagram below shows how Zola's salary will be taxed every month.
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* R10 000 is the lowest tax threshold. If you earn less than R10 000 per month you will not be taxed.
Contributions are deducted before tax is calculated, so Zola saves on tax every time he saves for retirement.

Additional Contributions

If you make additional voluntary contributions into your pension fund, your contributions are deducted from your salary before tax is applied.
For Example:
  • Zola chooses to boost her retirement savings by increasing her employer contributions towards her pension fund.
  • Zola decides to increase her contributions by 5%, which amounts to an additional R500.
  • The diagram below shows how Zola will benefit by making additional voluntary contributions towards her pension fund.
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* R10 000 is the lowest tax threshold. If you earn less than R10 000 per month you will not be taxed.
By making additional voluntary contributions, Zola is not only saving more for her future self, but also saving on tax while doing so!

Tax and your three pots

Your retirement fund contributions are deducted from your salary before you pay tax. This allows you to save on tax while saving towards your retirement at the same time. Make additional voluntary contributions and save more for your future and save on tax.

When will your retirement savings be taxed?

Your contributions and the investment growth on your Fund Credit will not be taxed until you take the money out of the fund. This will either be at withdrawal, your death or your retirement.
Tax and Retirement

Get expert financial advice

If you have any questions, contact the Alexforbes Individual Advice Centre (IAC):

Call 0860 100 444 or email iac@alexforbes.com

When you resign, get retrenched or are dismissed

Vested Pot

These are your retirement savings before 31 August 2024.

Your Options:

1

In-fund preservation

  • Preserve the full value of your vested pot in the fund.
2

Cash

  • Withdraw the full amount of your vested pot in cash.
  • If you choose to take a cash withdrawal from the vested pot, you cannot preserve the balance in your vested pot.
3

Transfer to another fund and withdraw cash

  • Transfer the full value of your vested pot to another fund
  • Withdraw a specific cash amount and transfer the balance to another fund.
How tax will be calculated:
Lump sum withdrawals will be taxed according to the relevant retirement fund tax tables.

Savings Pot

One-third of your ongoing contributions made after 1 September 2024.

Your Options:

1

In-fund preservation and cash:

  • Preserve the full value of your vested pot in the fund.
  • Withdraw a specific cash amount up to the maximum amount available from your savings pot.*
2

Transfer to another fund and withdraw cash

  • Transfer the full value of your savings pot.

  • Withdraw a specific cash amount and transfer the balance to another fund.*

* Conditions:
  • If you have not made a withdrawal within the tax year, you may make a withdrawal at your date of exit.
  • If you leave and have already withdrawn cash within the tax year, and you have less than R2 000 in your savings pot, you will be able to withdraw that balance.
How tax will be calculated:
Any withdrawals from your savings pot will be included in that year's taxable income and taxed at marginal tax rates.

Retirement Pot

Two-thirds of your ongoing contributions made after 1 September 2024.

Your Options:

When you leave the fund, there is no access to a cash lump sum from your retirement pot.

The full value of your retirement pot must be:

  • preserved in the fund
  • or transferred to another fund.
It is the member's responsibility to manage the retirement pot on exit from the fund.
How tax will be calculated:
No tax is paid on the purchase of an annuity. The monthly pension paid by the annuity is taxed at the marginal tax rates.

Tax tables

Withdrawal Tax Table (2025)

Taxable income (R)Tax rate
1 - 27 5000% of taxable income
27 501 - 726 00018% of taxable income above R27 500
726 001 - 1 089 000125 730 + 27% of taxable income above R726 000
1 089 000 and above223 740 + 36% of taxable income above R1 089 000

Retirement Tax Table (2025)

Taxable income (R)Tax rate
1 - 550 0000% of taxable income
550 001 - 770 00018% of taxable income above R550 000
770 001 - 1 155 000R39 6000 + 27% of taxable income above R770 000
1 155 001 and aboveR143 550 + 36% of taxable income above R1 155 000