Retirement planning vehicles

	Provident fund	Pension fund	Retirement annuity	Deferred compensation
Employer	10% of approved Remuneration of pension and provident funds. In practice up to 20% is allowed if justifiable Section 11(1)	10% of approved Remuneration of pension and provident funds. In practice up to 20% is allowed if justifiable Section 11(1)	No contribution	Pre – June 1982; full premium Term policy; full premium Regulation policy; maximum of remuneration Section 11(w) (dd)
Employee (Current)	No tax deduction	Deductible with a max. of the greater of: R1 750 OR 7.5% of pension remuneration Any excess may not be carried forward to the following year of assessment Limit now also applies to public sector employees. Deduction per person. Section 11(1)	Deductible with a max. of the greater of; 15% of non- retirement funding income; OR R3 500 allowable pension fund contribution; OR R1 750 Section 11(n)(aa)	No contribution
Employee (Arrear)	No tax deduction	R1 800 deductible p.a. Deduction per person. Any excess over R1 800 may be carried forward to the following year assessment. Section 11(k) (ii)(aa)	R 1 800 deductible p.a Section 11(n)(bb)	Not applicable

	Provident fund	Pension fund	Retirement annuity	Deferred compensation
Cash lump sum	Entire amount or surrender value of Policy	1/3 of total value (if annuity less than R1 800, full benefit) Section 1 “pension fund”(c)(ii)(d) Balance purchases compulsory annuity. Taxed i.t.o. tax table	1/3 of the total value (if annuity less than R1 800, full benefit) Section1 “Ra fund” (b)(ii) Balance purchases compulsory Annuity, taxed i.t.o. tax table	Entire cash amount or surrender value if ceded (taxed on value)
Tax-free portion
Taxable portion				Any one the first two requirement for the R30 000 exemption is met (see below) OR Termination was due to ceasing business or redundancy as a result of employer’s general reduction in personnel and circumstances warrant concession. Section 7A(4A),5(10)(g) The amount subject to average rate is limited to 3x average annual remuneration. Excess taxed at Marginal rate. Section 5(10)(d)(iA)(bb)

	Provident fund	Pension fund	Retirement annuity	Deferred compensation
Cash lump sum	Entire amount or surrender value of policy	Subject to rules fund.	Withdrawal not allowed prior to Age 55, except upon death or Disability	Cash or surrender value if discretion Of the employer (taxed at cession value).
Tax-free portion	Greater of: R1 800 + amounts transferred to approved funds; or member’s contributions previously disallowed.	Greater of: R1 800 + amounts transferred approved funds; or member’s contributions previously disallowed. Second Schedule paragraph 6	The amount transferred into another Approved RA fund Second Schedule paragraph 6	Concessions same as at retirement
Taxable portion	Taxed at the higher of the average Rates in year of retirement and the Preceding year. Section 5(10)(g) Second Schedule paragraph 7	Taxed at the higher of the average Rates in year of retirement and the Preceding year. Section 5(10)(g) Second Schedule paragraph 7	Taxed at the higher of the average Rates in year of retirement and the Preceding year. Section 5(10)(g) Second Schedule paragraph 7	Concessions same as at retirement

	Provident fund	Pension fund	Retirement annuity	Deferred compensation
Cash lump sum	Full death benefit	Subject to rules of fund	Premiums + 7% + 1/3(death benefit less premiums + 7%) Balance purchases compulsory annuity Section 1(b)(vi) “RA fund”	Full death benefit
Tax-free portion
Taxable portion	Taxed at the average rate of the deceased in year of death Second Schedule paragraph 5(1) Section 5(10)(g)	Taxed at the average rate of the deceased in year of death Second Schedule paragraph 5(1) Section 5(10)(g)	Taxed at the average rate of the deceased in year of death Second Schedule paragraph 5(1) Section 5(10)(g)	Taxed at the average rate of the deceased in year of death. Limit to same as at retirement. Second Schedule paragraph 5(1) Section 5(10)(g)