UNDERSTANDING TAX AND YOUR RETIREMENT FUND CONTRIBUTIONS

Here is some important information that you need to know about tax.
PLEASE NOTE: This is not tax advice. You are advised to get expert financial advice or contact SARS for guidance regarding your tax.
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Compulsory Contributions

Your compulsory pension fund contributions are deducted from your salary before any tax is deducted.
For Example:
  • Zola earns a gross salary of R10 000 per month.
  • Zola contributes R750 and Woolworths contributes R1 050 towards her pension fund.
  • Assuming that there are no other deductions, the diagram below shows how Zola's salary will be taxed every month.
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* R10 000 is the lowest tax threshold. If you earn less than R10 000 per month you will not be taxed.
Contributions are deducted before tax is calculated, so Zola saves on tax every time he saves for retirement.

Additional Contributions

If you make additional voluntary contributions into your pension fund, your contributions are deducted from your salary before tax is applied.
For Example:
  • Zola chooses to boost her retirement savings by increasing her employer contributions towards her pension fund.
  • Zola decides to increase her contributions by 5%, which amounts to an additional R500.
  • The diagram below shows how Zola will benefit by making additional voluntary contributions towards her pension fund.
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* R10 000 is the lowest tax threshold. If you earn less than R10 000 per month you will not be taxed.
By making additional voluntary contributions, Zola is not only saving more for her future self, but also saving on tax while doing so!
Your retirement fund contributions are deducted from your salary before you pay tax. This allows you to save on tax while saving towards your retirement at the same time. Make additional voluntary contributions and save more for your future and save on tax.

When will your retirement savings be taxed?

Your contributions and the investment growth on your Fund Credit will not be taxed until you take the money out of the fund. This will either be at withdrawal, your death or your retirement.
Tax and Retirement

Get expert financial advice

If you have any questions, contact the Alexforbes Individual Advice Centre (IAC):
Call 0860 100 444 or email iac@alexforbes.com