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RA or TFSA: which first?

Compare the tax you’d save with a retirement annuity against the tax-free growth of a tax-free savings account, for your salary.

Both a retirement annuity and a tax-free savings account save you tax. They do it at different times, and they have different rules about when you can use the money. The right balance depends on your salary and on when you, or your family, will need the savings.

In rand
In rand
In years
Already saving? Add your details
In rand

What you pay into a pension, provident or retirement annuity fund.

In rand

Added to your pay before the 27.5% limit, and counted with your own contributions towards that limit.

In rand
In rand

The total you have ever put in, this tax year included.

Your marginal tax rate is 26%. Saving R24,000 a year:

Illustrative

Retirement annuity

Tax you could save this year

R6,240

Real cost to you
R17,760
Deduction room left27.5% of income, max R430,000
R99,000

Tax-free savings

Tax you save now

R0

Tax on growth and withdrawals
None
Room left this tax yearR46,000 a year, R500,000 in your lifetime
R46,000
Things to weigh up
Retirement annuityTax-free savings
Getting your moneyMostly from age 55. One savings-pot withdrawal a year, taxed.Any time, but withdrawals can’t be paid back in.
Tax laterIncome in retirement is taxed. Part can be taken as a lump sum.No tax on growth or withdrawals.
LimitsDeduction up to 27.5% of income, max R430,000 a year.R46,000 a year, R500,000 in your lifetime.
Best whenYour tax rate now is higher than you expect it to be in retirement.You may need the money before retirement, or want flexibility.

Uses 2026/27 tax tables and limits. Many people use both. Which suits you depends on more than tax.

What next?

This is a rough guide, not advice. A planner can check it against your real numbers.

Have a planner check this

How this works

This tool is for education. It isn’t advice and it can’t promise any outcome. Results are illustrative and depend on the assumptions below. Tax figures are for the 2026/27 tax year, checked on 28 September 2026. Announced in Budget 2026 and applied by SARS from 1 March 2026. The Bill that makes them law is still before Parliament.

Assumptions version 2026-27-draft1.

Sources

  1. National Treasury, Budget 2026 Tax Guide
  2. National Treasury, Budget Review 2026, chapter 4
  3. SARS, Budget 2026 frequently asked questions
  4. SARS, tax-free investments
  5. SARS, two-pot retirement system
  6. FSCA, report on two-component related costs and fees (2025)
  7. SARB Exchange Control Circular 6/2026
  8. SARS, estate duty
  9. Administration of Estates Act regulations, regulation 8 (executor’s fees)
  10. SARS, cease to be a tax resident

Speak to a planner

Check the result against your own figures

In a free 20-minute call, a planner can go through your actual funds, tax and plans with you. Send us a WhatsApp message, call or email the office: