Provident, pension and retirement funds in South Africa
South African retirement funds (pension, provident and retirement annuity) are tax-advantaged savings vehicles. Since 1 September 2024, all new contributions fall under the two-pot system — split into a savings pot (1/3, accessible annually) and a retirement pot (2/3, preserved to retirement).
Payroll Africa Editorial · SARS Payroll Compliance Team
The Payroll Africa editorial team is composed of registered tax practitioners, payroll administrators and BCEA specialists who maintain the SARS PAYE, UIF, SDL and ETI engines that power the platform. Every article is reviewed against the current SARS BRS and Basic Conditions of Employment Act before publication.
- SARS registered tax practitioners
- SAPA-affiliated payroll administrators
- BCEA and LRA compliance reviewers
Last updated 30 Sept 2026
Contribution tax deductibility
Employer and employee contributions to a retirement fund are deductible up to 27.5% of the higher of remuneration or taxable income, capped at R350,000 per year.
IRP5 source codes
- 3697 — taxable retirement funding income (informational)
- 3698 — non-taxable retirement funding income
- 4001 — pension fund contribution (employee)
- 4003 — provident fund contribution (employee)
- 4006 — retirement annuity contribution
- 3817 — employer pension contribution (fringe benefit)
- 3825 — employer provident contribution (fringe benefit)
The two-pot system (from 1 Sep 2024)
New contributions are split 1/3 into a savings pot and 2/3 into a retirement pot. Members can withdraw from the savings pot once per tax year (min R2,000).
Frequently asked questions
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