TFG Retirement Fund

Taxation of Benefits

It is important that you as a member understand the different tax implications when benefits are paid.

Disability Benefits

You will be taxed on your disability premium every month, but the disability benefit (should you become disabled) will be paid out tax free.

Tax on withdrawal benefit

As from 1 March 2023, the first R27 500 of a cash withdrawal will be tax free with the balance taxed according to the following scale:

Taxable income (R) Rate of tax (R)	Taxable income (R) Rate of tax (R)
R0 – R27 500	0%
R27 501 – R726 000	18% of amount exceeding R27 500
R726 001 – R1 089 000	R125 730 plus 27% of the amount exceeding R726 000
R1 089 001 and above	R223 740 plus 36% of the amount exceeding R1 089 000

Please note that retrenchment benefits are not taxed as other withdrawal benefits and are taxed the same as retirement benefits.

The tax-free amount applies to the aggregate of all withdrawal lump sums received over the member’s lifetime after 1 March 2009. This means that you cannot get R27 500 from the Fund and R27 500 from the next fund you join. It is very important to note that any withdrawal benefits previously received, as well as amounts paid out in respect of divorces or maintenance orders, after 1 March 2009, will also be deducted from the tax-free amount.

Use the Tax Calculator to assist you calculate the tax payable on a lump sum.

Tax on retirement lump sum

The first R550 000 payable at retirement from a pension, provident or retirement annuity fund is tax free. The balance is taxed according to the following fixed scale below and is applicable from 1 March 2023:

Taxable income (R) Rate of tax (R)	Taxable income (R) Rate of tax (R)
R0 – R550 000	0% of taxable income
R550 001 – R770 000	18% of taxable income above R550 000
R770 001 – R1 155 000	R39 600 plus 27% of the amount exceeding R770 000
R1 155 001 and above	R143 550 plus 36% of the amount exceeding R1 155 000

This amount applies to the aggregate of all retirement lump sum payments received over the retiree’s lifetime. This means that you cannot get R550 000 from a retirement annuity and R550 000 from the Fund. Your retirement benefits will be added together and the first R550 000 will then be tax free. The balance will be taxed according to the scale above.

It is very important to note that any withdrawal benefits previously received, as well as amounts paid out in respect of divorces or maintenance orders, after 1 March 2009, or a severance benefit, after 1 March 2011, will also be deducted from the tax-free amount.

Use the Tax Calculator to assist you calculate the tax payable on a lump sum.

Tax on death benefit

The death benefits paid by the Fund are taxed exactly the same as retirement benefits.

The first R550 000 payable at death from a pension, provident or retirement annuity fund is tax free. The balance is taxed according to the following fixed scale below and is applicable from 1 March 2023:

Taxable income (R) Rate of tax (R)	Taxable income (R) Rate of tax (R)
R0 – R550 000	0% of taxable income
R550 001 – R770 000	18% of taxable income above R550 000
R770 001 – R1 155 000	R39 600 plus 27% of the amount exceeding R770 000
R1 155 001 and above	R143 550 plus 36% of the amount exceeding R1 155 000

This amount applies to the aggregate of all retirement fund lump sums received over the member’s lifetime. This means that the member’s dependants cannot get R550 000 tax free from a retirement annuity and R550 000 from the Fund. The benefits will be added together and the first R550 000 will then be tax free. The balance will be taxed according to the scale above.

It is very important to note that any withdrawal benefits previously received by the deceased member, as well as amounts paid out in respect of divorces or maintenance orders, after 1 March 2009, or a severance benefit, after 1 March 2011, will also be deducted from the tax-free amount.