A retirement annuity (RA) is a private retirement-savings product regulated under the Pension Funds Act. Contributions are tax-deductible up to 27.5% of taxable income or R350,000 a year, whichever is lower. Investment growth inside the RA is tax-free; tax is paid on withdrawal at retirement, usually at a lower marginal rate than during working years.
RAs are designed for retirement, not flexibility. Funds are locked until age 55 except on emigration, permanent disability, or if the total balance is under R15,000. From 1 September 2024, new contributions follow the two-pot system — one-third flows into a savings pot accessible once per year, two-thirds locks in the retirement pot.
At retirement, up to one-third of the vested pot can be taken as cash (taxed under the lump-sum tables); two-thirds must buy a living or guaranteed annuity. RA contributions sit alongside pension- and provident-fund contributions for the 27.5%/R350k deduction cap — it’s a combined annual limit, not per-vehicle.