Contribution Limits And Rules For Retirement Annuities in SA

Is there a set minimum monthly contribution for retirement annuities?

This depends on the service provider (if investing in a RA directly) or the prescribed minimum contribution set by your employer (if investing in a company retirement fund).

Is there a maximum limit on monthly contributions for RAs?

No, you can invest however much you like, or can afford to, monthly in retirement annuities.

If you are investing via your company’s retirement fund there may be a set percentage of salary monthly contribution. However, you are able to open another retirement annuity directly – or more than one – where you can decide how much to invest monthly.

What is maximum amount I can invest in a retirement annuity each year?

There is no maximum limit; you invest as much as you like / can afford across one or more RAs.

But bear in mind that is a limit on the tax you can claim back for RA contributions: you are only allowed to invest up to 27.5% of your taxable income up to an annual maximum of R350,000 a year on a tax deductible basis. Anything contributions above this will not be tax deductible.

Also note that, no matter how much you have invested at retirement age, you are only able to withdraw the first R500,000 tax-free. Provided that no previous withdrawals have been made prior to retirement.

Is there an annual deadline for retirement contributions?

No, you can make contributions to your RA year round. However, if you want to maximize your tax benefit on RA contributions you should aim to make all contributions before the end of each tax year (28th February). For example, if your RA contributions for the year are below the annual maximum of R350,000 you can make a lump sum payment to your retirement annuity before 28th February to claim the maximum tax back in respect of those contributions.

What happens if I can no longer afford RA payments, either for a short or long-term period?

Absolutely nothing. You can suspend retirement contributions at any time and the savings you have accumulated will remain intact and continue to earn investment returns.

What is a paid up retirement annuity?

If your benefit becomes Paid-Up, no further contributions will be payable, and your money will remain invested up until such time as you provide us with an instruction to either pay the benefit out in cash, transfer it to another approved fund or until you retire. Correct