Last updated 10 April 2026
If you want to know how much your retirement annuity could be worth one day, this calculator shows you the numbers clearly.
It estimates:
- Your retirement value
- Your potential monthly income
- The effect of inflation
- The tax deduction benefit
Use the Retirement Annuity Calculator to see your projected outcome:
What Is a Retirement Annuity in South Africa?
A retirement annuity, or RA, is a long-term investment designed specifically for retirement. It allows you to:
- Invest for retirement
- Reduce your taxable income
- Maintain your lifestyle at retirement
You cannot withdraw from an RA before age 55, except in rare cases like emigration under strict rules. This makes it restrictive, but it also forces long-term discipline.
How Retirement Annuity Tax Deductions Work
One of the biggest benefits of an RA is the tax deduction. In South Africa, you can deduct up to 27.5% of your taxable income, which is capped at R350,000 per tax year. (A SARS tax year runs from 1 March to 28 February.)
If you earn R500,000 per year: 27.5% of R500,000 = R137,500. Let’s say you contribute that amount to your RA, your taxable income drops to R362,500. This means you will pay less tax than you would if you didn’t take out an RA.
This is known as tax deferral. You get the benefit now, but you will pay tax when drawing income at retirement.
How Much Tax Can You Save?
Let’s use a simple example.
Annual income: R600,000
RA contribution: R100,000
If your marginal tax rate is 36%, that R100,000 contribution reduces your tax bill by roughly:
R100,000 × 36% = R36,000
You effectively invest R100,000, but your real out-of-pocket cost may feel closer to R64,000 after the tax refund. This is why high earners benefit significantly from RAs.
How Much Will My Retirement Annuity Be Worth?
Your RA value depends on a lot of factors, including but not limited to:
- Monthly contribution
- Years invested
- Investment return
- Fees
- Inflation
Your ROI is one of the most important factors, and this hinges on Regulation 28.
What Is Regulation 28 & How It Affects Your RA
All retirement annuities in South Africa must comply with Regulation 28 of the Pension Funds Act. Regulation 28 limits how your retirement money can be invested.
The goal is to protect investors from taking excessive risk with retirement savings. It sets maximum limits for how much of your RA can be invested in certain asset classes.
Current broad limits include:
- Maximum 75% in equities (shares)
- Maximum 45% offshore exposure
- Maximum 25% in property
- Limits on hedge funds and private equity
This means your RA cannot be 100% invested in offshore ETFs or aggressive equity funds. Even if you want full exposure to global markets, Regulation 28 prevents it inside an RA.
Example:
If you invest R3,000 per month for 30 years at an average return of 10% (Reg 28 taken into consideration) per year:
Your total contributions: R1,080,000
Estimated future value: ± R6 million
At age 55 or older, you can only withdraw up to one-third as a lump sum. In the example used above, one-third will be ± R2 million. Of that ± R2 million, only the first R500 000 will be tax-free, and the rest of the R1,500,000 will be taxed accordingly.
The remaining two-thirds must buy a pension product. You can either choose between a life annuity, or a living annuity.
The difference is that a life annuity guarantees you income for life, while a living annuity gives you flexible income, but is dependent on the performance of the market.
Living annuities allow you to draw between 2.5% and 17.5% per year. If you withdraw too much, you risk your capital running out. So such decisions matter, and must be discussed with a licensed financial advisor.
Retirement Annuity vs TFSA in South Africa
Many people ask which is better.
RA advantages:
- Immediate tax deduction
- Encourages long-term discipline
- No tax on dividends, interest, or capital gains inside the fund
TFSA advantages:
- No restrictions on withdrawals
- No tax ever on growth
- No tax on withdrawals
An RA reduces your tax now. A TFSA gives you flexibility later.
If you want to compare growth, use our TFSA calculator.
Use the Retirement Annuity Calculator
Before choosing contribution amounts, run your numbers.
Play around with the:
- Monthly contribution
- Expected return
- Retirement age
- Inflation
See how small changes today affect your income at 60 or 65. Long-term investing is about consistency, so take it seriously.
Use the RA Calculator to make decisions based on numbers.