Everything you want to know about your retirement annuity AND tax

Here, all neatly summarised in one place, are answers to questions you might have about:

The tax benefits of a retirement annuity

How to maximise the tax benefits of your RA

Tax season and your RA

The advantages of a 10X RA

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What are the tax benefits of a retirement annuity?

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Contributions are tax deductible

In short, you pay less tax.

Money that you put into a retirement annuity is deducted from your taxable income. So, for example, if you earn R500,000 a year, and contribute R50,000 to an RA during the year, you’re only taxed on R450,000. (This is to illustrate the principle only – in reality, your tax calculation will probably include other tax deductions.)

There are limits. A maximum of 27.5% of your remuneration or taxable income (whichever is higher), and no more than R350,000, is tax deductible in a tax year. You can contribute more to your RA but after you’ve reached these limits, your contributions are rolled forward to and automatically deducted in future years. Also, the limit applies to all your retirement savings combined (including retirement annuities, pension funds and provident funds). So if you contributed the maximum of R350,000 in total, and R150,000 went to a pension fund at work, only R200,000 of RA contributions would be deductible.

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Returns on your investment are tax free

You don’t pay tax on RA investment returns, such as interest income, dividends and capital gains.

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You can take a tax free lump sum when you retire

When you retire you can take up to a third of your RA as a lump sum (or all of it if it’s worth less than R247,500).

The first R500,000 that you take as a lump sum is not taxed. Anything more that you take as a lump sum is taxed at incremental rates: the next R200,000 is taxed at 18%, the next R350,000 after that at 27%, and anything after that at 36%.

More about RA benefits

How to maximise the tax benefits of your RA

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Contribute as much as you can

The more you save, the less tax you pay.

Here’s an example:
Let’s say you earn R500,000 a year. If you contributed 10% of that (R50,000) to your RA, then at the current income tax rates, you’d qualify for a refund of R18,000. That’s a pretty decent bonus. And, effectively, your R50,000 contribution only costs you R32,000.

If you contribute R75,000 instead of 50,000 (15% instead of 10%), your tax refund increases to R27,000.

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Reinvest your refund

What if you put the R18,000 refund (from the example above) back into your RA the next tax year? Add that to the R50,000 that you’ll probably continue contributing and you’ve suddenly contributed R68,000. Now your tax refund is going to be R24,480. Reinvest that the following year and your refund will be R26,813.

At the same time, you’re contributing more to your RA. Those extra savings will grow and compound over time, massively boosting your income when you retire.

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Add what you can by the end of the tax year

The tax year ends on 28 February. If you have a lump sum of money available to top up your RA before then, you can increase your tax benefits for that year. Some people are able to make several lump sum contributions in the months leading up to the end of the tax year.

Others choose to increase their monthly contributions, ideally through a debit order. That way the contribution is automatic, and they aren’t tempted to spend the money. People also say they find it easier to live on what’s left after they’ve saved, rather than save what’s left after they’ve lived (which is usually nothing).

Your retirement annuity and
tax season

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What documents you need when submitting a tax return

You need an income tax certificate, which is issued by your RA provider(s). The certificate indicates how much you contributed to the retirement annuity during the year. You include that amount on your tax return and SARS calculates how much of your contributions it will allow as a tax deduction for that year.

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How to get your tax certificate

Your provider may email it to you but most providers make your certificate available online.

To get the 2017 tax certificate for your 10X RA (and other 10X retirement products), log in to the 10X portal. (If you’ve forgotten your login details, you can SMS “ACCESS” to 44844.)

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How to calculate the tax refund for your RA

Multiply the amount you’ve contributed during the year by your marginal tax rate (the highest rate applied to any part of your income). So if you contributed R10,000 during the tax year, and your marginal tax rate is 25%, you’d get a refund of R2,500.

Note that your refund may not mean an actual payment back from SARS: if your employer takes your RA contributions into account when deducting PAYE, you actually get the refund back monthly in the form of higher take-home pay.

The benefits of a 10X retirement annuity The benefits of a 10X retirement annuity

Retirement annuities are not all created equal. Most are expensive and perform worse than they should: over 40 years, high fees can leave you with 40% less than you could have. If you start or switch to a 10X RA you should get more money when you retire, thanks to a proven and award-winning investment strategy that combines these four principles:

Index tracking

Trying to pick winning stocks usually fails. By tracking the market index, we deliver a higher return than most fund managers.

Low fees

Independent research found that fees are the most reliable predictor of your investment’s performance. At 1% or less before VAT, ours are less than half the industry average.

Diversified portfolio

With both eyes on long-term growth, we invest your money mainly in local and international shares, as well as a mix of property, bonds and cash.

Life stage investing

We automatically adjust your portfolio according to your investing time horizon, maximising growth for as long as possible, then reducing risk as you approach retirement.



This strategy has consistently achieved superior long-term performance, which means more money when it matters most.

Chat to us

Are you considering starting or switching to a 10X retirement annuity? Do you have questions about retirement annuities, other retirement investments, your 2017 tax return or tax relief? One of our retirement experts can contact you directly, and for free.

RA and tax FAQs

If you have more questions about retirement savings and tax, we have answers. They cover topics such as pensionable and non-pensionable income, unclaimed contributions, tax rates on annuity income, and more detail about some of the information covered here.

View relevant FAQs