Retirement Lump Sum Calculator South Africa
See exactly how much of your retirement fund you can take as cash, what must buy an annuity, and the tax on your lump sum under SARS's 2026/2027 retirement table.
You can take up to one-third of your retirement fund as cash (the rest must buy an annuity, unless your total fund value is R360,000 or less, in which case the whole amount is cash). The cash portion is taxed under the retirement lump sum table: the first R550,000 tax-free for life, then 18%, 27% and 36% on higher amounts (2026/2027 SARS rules).
Retiring is one of the few times SARS treats a lump sum generously, but the rules have two separate parts most people conflate: how much you're actually allowed to take as cash, and how that cash gets taxed. Enter your fund value below to see both: the maximum cash available under the one-third rule, and the exact tax on it under the retirement lump sum table.
🌴 Retirement Details
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How to Use This Calculator
Enter your total retirement fund value
The full value of your pension, provident or retirement annuity fund on the day you retire.
Enter prior retirement lump sums, if any
Only if you've received a retirement, death or retrenchment lump sum before; most people leave this at 0.
See your cash vs annuity split
The calculator shows the maximum you can take as cash and what must buy an annuity, based on the one-third rule and the R360,000 de minimis exception.
Adjust the cash amount, if you want less
You can choose to take less than the maximum cash allowed and annuitise more; you can't take more than the maximum.
See your tax and net cash payout
Tax is calculated under the retirement lump sum table: the first R550,000 tax-free, then rising rates, on the cash portion only.
Two separate rules, easy to conflate
Retiring triggers two independent questions that most guides blur together. The first is how much of your fund you're actually allowed to take as cash versus how much must buy you a monthly income for life. The second is how that cash portion gets taxed once you've decided. Getting the first one wrong means the tax number you calculate doesn't even apply to the right amount. This calculator handles both questions together, in the order they actually happen: first the split, then the tax.
How much cash you're allowed to take
You can take up to one-third of your retirement interest as a cash lump sum. The remaining two-thirds must be used to buy an annuity, a product that pays you a regular income for the rest of your life, rather than being paid to you directly. This applies the same way across pension funds, retirement annuities and provident fund contributions and growth from 1 March 2021 onward. Provident fund money built up before that date keeps its old, fully cash-commutable status as a protected right, which is why two people with identically sized provident funds can have different maximum cash amounts depending on how long they've been contributing.
There's one exception that overrides the one-third rule entirely: if your total retirement interest in a fund is R360,000 or less, you can take the whole amount as cash, with no annuity requirement at all. This threshold was raised from R247,500, effective 1 March 2026. It exists because forcing someone to buy an annuity with a small amount often costs more in administration fees than the monthly income it would ever realistically pay out.
The retirement lump sum tax table
Once you know your cash amount, it's taxed on a sliding scale, applied to your cumulative lifetime retirement lump sums:
| Cumulative Lump Sum Amount | Tax |
|---|---|
| R0 – R550,000 | 0% |
| 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 |
| Above R1,155,000 | R143,550 + 36% of the amount above R1,155,000 |
This R550,000 threshold is dramatically more generous than the R27,500 threshold used on the withdrawal lump sum table (the one that applies if you resign or are dismissed rather than retiring). It's also a lifetime limit, shared across every retirement, death and retrenchment lump sum you ever receive, not a fresh allowance for each fund you retire from.
Worked example: a R1.8 million fund at retirement
Someone retires with a total fund value of R1,800,000, no prior lump sums, and takes the maximum cash allowed.
| Item | Amount |
|---|---|
| Total fund value | R 1,800,000 |
| Maximum cash (one-third) | R 600,000 |
| Must buy an annuity (two-thirds) | R 1,200,000 |
| Tax on the R600,000 cash lump sum | R 9,000 |
| Net cash payout | R 591,000 |
The tax works out to R9,000: R550,000 of the R600,000 falls in the tax-free band, and only the remaining R50,000 above that threshold is taxed, at 18%. That's an effective tax rate of just 1.5% on the cash portion taken, since the vast majority of it sits inside the tax-free threshold. Use the calculator above with your own fund value to see your exact number.
Why the annuity requirement exists
The two-thirds rule isn't arbitrary bureaucracy; it exists to stop retirement savings, built up over decades specifically to fund old age, from being spent in the first few years of retirement and leaving nothing for the following twenty or thirty years. An annuity converts a lump sum into a monthly income stream you can't outlive, or at least can't run out of as quickly as cash sitting in a bank account. It's the same logic behind a state pension, just funded from your own contributions rather than general tax revenue. The trade-off is control: once the two-thirds buys an annuity, you generally can't access that capital as a lump sum again, only the income it generates each month.
Choosing how much cash to take
Taking less than your maximum allowed cash isn't just a compliance detail; it's a real financial choice with a real tax consequence. Consider the same R1,800,000 fund from the example above: taking the full R600,000 maximum costs R9,000 in tax, since R50,000 of it spills over the R550,000 threshold. Taking only R400,000 in cash instead, and directing the other R200,000 into the annuity purchase on top of the required two-thirds, costs nothing in lump sum tax at all, since R400,000 sits entirely inside the tax-free band. The trade-off is a smaller upfront cash amount in exchange for a larger monthly annuity income later, and no tax paid now on the portion you chose not to take. There's no universally right answer; it depends on whether you have an immediate need for capital (paying off a bond, a lump sum medical cost) or whether maximising your monthly income for the rest of retirement matters more to you.
A small fund under the de minimis threshold
Someone retires with a total fund value of R320,000 and no prior lump sums. Because this is under the R360,000 de minimis threshold, the full R320,000 is available as cash, no annuity purchase required. Since R320,000 is also under the R550,000 tax-free threshold on the lump sum table, the entire amount is paid out completely tax-free.