Retirement Annuity Tax Deduction in South Africa: The 27.5% Rule
Short answer: You can deduct retirement fund contributions up to the lesser of 27.5% of the higher of your remuneration or taxable income, and an annual cap. Contributions above the limit carry forward to the next year.
Check before you rely on this: SARS's own pages disagree on the annual cap. Its section 11F notice and the 2026 general taxation guide show R350 000. The Budget 2026 FAQ says the cap is R430 000. We could not confirm that R430 000 is law yet. Check the current SARS figure before you make or claim a contribution.
The rule
The deduction covers contributions by a member to a pension, provident or retirement annuity fund. It is limited to the lesser of 27.5% of the higher of your remuneration or taxable income, and the annual cap. Retirement lump sums and severance benefits are left out of both measures.
If you contribute more than the limit
The excess is not lost. It is carried forward to the following year of assessment and treated as a contribution in that year.
What to keep
The tax certificate from your retirement annuity or fund each year, and proof of any extra contributions you made yourself.
How Tax Pig does this on WhatsApp
- Send your retirement annuity certificate and extra contribution proofs on WhatsApp so they are filed.
- Ask for your tax estimate to see roughly what a claim does.
- Say "remind me to top up my RA on 20 February" for a reminder before the tax year ends.
Frequently asked questions
Does my employer's contribution count?
Your deduction depends on how the contribution is treated. Ask your fund or a registered tax practitioner.
Which year does a contribution fall in?
The year in which it is paid. The tax year runs from 01/03 to the end of February.
Can a self employed person claim?
Yes, the rule uses the higher of remuneration or taxable income. SARS's guides give the details.
Sources
- SARS: Retirement fund contribution deductions, section 11F
- SARS: What are s11F annual allowable deductions
- SARS: Budget 2026 frequently asked questions
Related guides
General information, not tax advice. Check your own situation with SARS or a registered tax practitioner.
