What this calculator does

Compares the projected retirement value of a retirement annuity (RA) — your contributions only — against an employer pension fund that also receives employer contributions. It calculates your annual tax deduction and tax saving from contributing, and lets you model the cost of cashing out a pension fund early on resignation, taxed under the SARS Withdrawal Benefit Table.

How to interpret your results

An RA never receives employer contributions, so its projected value reflects your own contributions only. A pension fund's projected value includes your employer's match — the difference between the two is the rand value your employer adds that an RA cannot replicate. If you model an early withdrawal, the green card shows you'd still come out ahead even after withdrawal tax (because the employer match outweighs the tax cost); the red card shows the rand cost of cashing out instead of preserving your fund.

Assumptions applied

• Returns compound monthly, with contributions made at the start of each month.
• Your tax saving applies your marginal tax rate to the lesser of your contributions and the SARS retirement deduction cap (27.5% of annual income, capped at R430,000/year).
• The RA projection uses your own contributions only — retirement annuities do not receive employer contributions.
• The early withdrawal scenario assumes the full pension fund balance is cashed out and taxed as a first withdrawal under the SARS Withdrawal Benefit Table (R0–R27,500 tax-free, then 18% / 27% / 36%).
• After an early withdrawal, the net payout is assumed to be reinvested at the same expected return for the remaining years, with no further contributions.

What this calculator doesn't account for

• Does not model the two-pot system's savings/retirement component split — the early withdrawal scenario treats the full pension fund balance as accessible on resignation.
• Does not apply the R550,000 lifetime tax-free retirement lump sum or the Retirement Lump Sum Benefit Table — those apply at actual retirement, not on early withdrawal.
• Assumes a constant contribution rate, return, and tax rate for the full projection period — real income, returns, and tax brackets change over time.
• Does not account for product fees, which reduce the effective return on both RA and pension fund products.