The 2025 tax year-end is nearing on the 28th of February, and now would be ideal time to review your retirement funds and take full advantage of the tax incentives provided by the government. By topping up your retirement fund, you can reduce your tax liability and improve your nest egg at retirement.
There are multiple benefits of investing in a retirement fund, with the overarching theme being that they are a tax efficient investment product.
Whilst you are invested in a retirement fund, you do not pay any tax on the growth within the fund. This means that at retirement, members can also claim a tax free lumpsum of up to R550 000, which could assist in settling any debt that you may have. From an estate duty perspective, retirement funds fall outside of the deceased estate and are therefore not subject to estate duty.

In this article, we will explore how the tax-deductible contributions to the retirement fund can reduce your overall tax liability and save you from paying tax.
Retirement fund members are allowed tax-deductible (pre-tax) contributions to their retirement fund of up to 27.5% of the higher of their taxable income or remuneration, capped at R350 000 per tax year. These deductible contributions reduce an individual’s taxable income during the year of assessment and thereby reduce their overall tax liability.
Occupational retirement fund members (Pension and Provident Fund Members) who are not utilising their full tax-deductible contribution limit may make additional voluntary contributions (if the Fund Rules allow), or they may start a Retirement Annuity (RA) in their personal capacity for additional contributions to a retirement fund.
Individuals who have an RA in their own name may top up their RA to the allowed limit and reap maximum benefits during the year of assessment by making a once-off lumpsum contribution before the tax year end.
The table below illustrates how contributing to an RA reduces your overall tax liability at different RA contribution levels:
The table alongside illustrates how contributing to an RA reduces your overall tax liability at different RA contribution levels.
We can see that an individual earning R500 000 per annum, can reduce his/her tax liability by R23 250 by contributing 15% to an RA or save R42 225 by contributing 27.5% to an RA.
* Calculations based on the 2024/2025 year of assessment SARS tax tables

At 27four, we live investments.
For investors looking to invest in a retirement fund, we have a comprehensive fund offering that caters to every investment objective and risk profile. Our range of diversified, Regulation 28 conventional and Shariah compliant funds are ideal for long-term wealth creation.
The consistent application of our investment approach is designed to deliver superior risk-adjusted performance over the long term.
The below table indicates the fund suitability for each of these product types:
