Use TaxTim's free SARS retirement fund lump sum tax calculator to work out the tax payable on a cash lump sum from your pension, provident or retirement annuity (RA) fund. South Africa taxes retirement lump sums on their own special SARS tax tables, separate from your normal income tax, and the table that applies depends on whether you take the cash before retirement (a withdrawal) or at retirement, death or retrenchment. The rates and thresholds below are for the 2027 tax year (1 March 2026 – 28 February 2027), and SARS has confirmed no changes from the 2026 tax year.
A retirement-fund lump sum is not added to your salary and taxed at your normal marginal rate. Instead, SARS taxes it under one of two fixed tables in the Second Schedule to the Income Tax Act, and the calculator picks the right one for you. If you cash out BEFORE retirement (for example resigning and taking your pension or provident fund in cash), the less generous withdrawal benefit table applies, where only the first R27,500 is tax-free. If you take the money AT retirement, on death, or as a severance/retrenchment benefit, the more generous retirement/severance table applies, with the first R550,000 tax-free. Crucially, SARS taxes lump sums cumulatively (paragraph 2A of the Second Schedule): every retirement-fund lump sum and taxable severance benefit you have received since 1 October 2007 is aggregated, so the tax-free portion is only granted once across your lifetime, not afresh on each withdrawal. Note that two-pot savings-component withdrawals are NOT taxed on these tables; they are added to your income and taxed at your marginal rate (use the two-pot calculator for those).
Withdrawal benefit table (cash taken BEFORE retirement, e.g. resignation):
| Lump sum (aggregated) | Tax |
|---|---|
| R0 – R27,500 | 0% (tax-free) |
| R27,501 – R726,000 | 18% of the amount above R27,500 |
| R726,001 – R1,089,000 | R125,730 + 27% of the amount above R726,000 |
| R1,089,001 and above | R223,740 + 36% of the amount above R1,089,000 |
Retirement / severance benefit table (at retirement, death or retrenchment):
| Lump sum (aggregated) | Tax |
|---|---|
| R0 – R550,000 | 0% (tax-free) |
| R550,001 – R770,000 | 18% of the amount above R550,000 |
| R770,001 – R1,155,000 | R39,600 + 27% of the amount above R770,000 |
| R1,155,001 and above | R143,550 + 36% of the amount above R1,155,000 |
Example (2027 tax year, first lump sum, no prior withdrawals): Thabo retires and takes a R900,000 lump sum from his pension fund. Because this is taken AT retirement, the retirement/severance table applies: the first R550,000 is tax-free; the next R220,000 (R550,001–R770,000) is taxed at 18% = R39,600; and the remaining R130,000 (R770,001–R900,000) is taxed at 27% = R35,100. Total tax = R39,600 + R35,100 = R74,700, so Thabo keeps R825,300. Had he instead resigned and taken the same R900,000 as an early withdrawal, only R27,500 would be tax-free and the tax would be far higher. That is exactly why timing matters.
A retirement-fund lump sum is taxed on a special SARS table, not at your normal salary rate. If taken at retirement, death or retrenchment the first R550,000 is tax-free; if taken as an early withdrawal (e.g. resignation) only the first R27,500 is tax-free. The balance is taxed at 18%, 27% and 36%.
A withdrawal benefit is cash taken before retirement, such as when you resign and withdraw your pension or provident fund. It uses the harsher table (R27,500 tax-free). A retirement benefit is taken at retirement, on death, or as severance/retrenchment, and uses the generous table where the first R550,000 is tax-free.
Yes. SARS taxes retirement-fund lump sums cumulatively under paragraph 2A of the Second Schedule. Every lump sum and taxable severance benefit received since 1 October 2007 is aggregated before the table is applied, so the tax-free portion (R550,000 or R27,500) is granted only once across your lifetime, not on each withdrawal.
No. Withdrawals from the savings component of the two-pot system are not taxed on the retirement lump sum tables. They are added to your taxable income and taxed at your marginal rate (18% to 45%). Use TaxTim's two-pot calculator to estimate the tax on a savings-pot withdrawal.
If you take the lump sum at retirement, death or retrenchment, the first R550,000 is tax-free (assuming no prior lump sums). If you withdraw before retirement, only the first R27,500 is tax-free. These tax-free amounts are lifetime totals because SARS aggregates all lump sums received since 1 October 2007.
The figures shown are for the 2027 tax year (1 March 2026 – 28 February 2027). SARS confirms there were no changes from the 2026 tax year, and the current tables have applied since the 2024 tax year (from 1 March 2023). Select your tax year in the calculator to use the correct table for an earlier withdrawal.
Ready to file with TaxTim?
Turn these numbers into a properly completed, SARS-ready return. TaxTim guides you question-by-question and submits to SARS eFiling for you.
Start your tax return