Can I open a new retirement annuity after retiring and still receive tax benefits? (Part III)

Can I open a new retirement annuity after retiring and still receive tax benefits? (Part III)

A third advisor answers this reader’s question.

By Maria Smit – Brenthurst Wealth

·

15 Sep 2026, 04:05

I have already retired and currently draw an income from an existing life annuity. Can I still open a new retirement annuity, and if so, would I qualify for the associated tax benefits?

Dear reader,

Yes, you can still contribute to a retirement annuity (RA) after you have retired – the South African Revenue Service (Sars) does not require you to be employed in order to qualify for a retirement-fund contribution deduction.

Read:

Can I open a new retirement annuity after retiring and still receive tax benefits? (Part I)
Can I open a new retirement annuity after retiring and still receive tax benefits? (Part II)

Sars’s current guidance states that individuals who contribute to a retirement annuity fund may, under qualify for the Section 11F tax deduction outlined in the Income Tax Act.

The important point is that the tax benefit depends on whether you still have taxable income.

Income received from a life annuity is generally taxable, and Sars confirms that a person may continue to pay income tax on annuity income even after they have stopped working.

For the 2027 tax year, retirement fund contributions are deductible up to 27.5% of the greater of remuneration or taxable income, subject to the applicable calculation and an annual maximum of R430 000. Any contribution that cannot be deducted because of these limits may be carried forward to future tax years.

So, for example, if your life annuity is your main source of income and you are paying income tax on it, contributing some of your available discretionary capital to a new RA could reduce your taxable income and therefore your income tax liability.

There is, however, an important trade-off.

Money contributed to an RA becomes retirement-fund money and is subject to the rules governing retirement funds and access to those benefits.

It therefore makes sense to consider your liquidity needs before contributing purely for the tax deduction.

Read: One retirement annuity or several? A strategic decision with long-term consequences

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