Pension Fund Withdrawal Tax in South Africa
The tax you pay depends on whether you withdraw at retirement or before. Understand both tables and see real examples before you decide.
Retirement Lump-Sum Tax Table
Used when you retire (age 55+) or are retrenched. More favourable — first R550,000 tax-free.
| Amount | Rate | Max Tax |
|---|---|---|
| R0 – R550,000 | 0% | R0 |
| R550,001 – R770,000 | 18% | R39,600 |
| R770,001 – R1,155,000 | 27% | R103,950 |
| Above R1,155,000 | 36% | Uncapped |
Resignation Withdrawal Tax Table
Used when you resign and take a cash payout (not at retirement). Less favourable — only R27,500 tax-free.
| Amount | Rate | Max Tax |
|---|---|---|
| R0 – R27,500 | 0% | R0 |
| R27,501 – R726,000 | 18% | R125,730 |
| R726,001 – R1,089,000 | 27% | R98,010 |
| Above R1,089,000 | 36% | Uncapped |
Examples — Tax on a R500,000 Payout
At Retirement (Retirement Table)
Lump sumR500,000
Tax-free portionR500,000
Tax payableR0
Net receivedR500,000
On Resignation (Withdrawal Table)
WithdrawalR500,000
Tax-free portionR27,500
Taxable amountR472,500
Tax (18%)R85,050
Net receivedR414,950
💡 Key insight
By preserving your R500,000 in a preservation fund instead of cashing out on resignation, you save R85,050 in tax immediately, PLUS you keep all of it growing until retirement when the first R550,000 is 100% tax-free.
Thinking of Taking Your Pension as Cash?
Speak to a certified financial advisor before you withdraw — the tax saving from preservation can be life-changing.
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