Benefits
Pension fund
A retirement savings vehicle where contributions are tax-deductible (up to 27.5% of income, capped at R350,000/year).
Full definition
A pension fund is a retirement savings scheme where employer + employee contributions are made monthly. Contributions are tax-deductible up to 27.5% of the greater of remuneration or taxable income, capped at R350,000 per year. At retirement, up to one-third may be taken as cash and the balance must purchase an annuity.
See also
Provident fund
A retirement fund similar to a pension fund, harmonised with pension fund rules since 1 March 2021.
Two-pot retirement system
From 1 September 2024, one-third of new retirement contributions go to a Savings Pot; two-thirds to a Retirement Pot.
Retirement annuity (RA)
An individual retirement product providing the same tax deduction (27.5%, capped R350,000) as a pension fund.
Automate Pension fund in your payroll
Payroll Africa handles Pension fund calculations automatically for South African employers — SARS-aligned for 2026/27. From R90/month.
Browse the full South African payroll glossary — 55 terms explained.