While you need to consider the impact of tax when planning your retirement savings strategy, it shouldn’t be your primary concern. That said, it needs to be factored in both while saving for retirement, and during retirement, given the different tax treatment of those two scenarios.
Broadly speaking, the taxation process can be summed up as “exempt-exempt-tax”, consistent with regulations in many countries globally. You are exempt from tax on contributions made while saving for retirement (up to certain limits), and you are exempt from gains on the investments while you are saving, but you are subject to income tax upon retirement as you draw down your savings.
Retirement savings vehicles
The key retirement-savings vehicles are retirement annuities and pension or provident funds. The main difference between these products is that the latter are employer-provided and are typically mandated in most large businesses. Retirement annuities are typically used by self-employed individuals, employees in organisations that don’t offer a pension or provident fund, and those who want to increase their retirement savings.
The main benefits of retirement annuities are that you are able to contribute to as many of them as you wish, you can stop contributing whenever you want, and they are transferable. There is additional flexibility in that lump-sum retirement annuities are available. This is a tax-efficient way to house any excess savings, as you are able to use the lump-sum amount to reduce your income tax liability in that year.
The Taxation Laws Amendment Act
The signing into law of the Taxation Laws Amendment Act (2015) and Tax Administration Laws Amendment Act (2015) by former President Jacob Zuma prompted many questions from those who are saving for retirement through retirement annuities, pensions and provident funds.
In short, the act ensures that the tax benefits of contributions to provident funds, pension funds and retirement annuities are now on an equal footing.
It is also important to note that most people currently saving for retirement will be unaffected or better off under the changes. High-income earners are likely to be the most affected by the changes.
How the Act affects you: Before retirement
The tax deduction increases from 15% to 27.5% of taxable income or remuneration, up to a maximum of R350 000 annually, on contributions made towards structured retirement savings. It now applies across the board, in other words, to provident funds, pension funds and retirement annuities.
The distinction between retirement funding and non-retirement funding income has also been removed. That means all clients who were members of a pension or provident fund, and therefore unable to take out a retirement annuity, can now top-up to the limit of 27.5%.
Also, only employees are able to claim contributions, regardless of whether they actually made them (companies will often contribute to a pension).
How the Act affects you: After retirement
The laws mean that the rules that governed provident funds changed to the same as those that governed pension funds. Provident fund members can only withdraw one-third of those savings at retirement, and they are required to purchase an annuity with the remaining two-thirds.
Effectively, one could argue that the government is looking to help protect retirees by enforcing compulsory preservation and making it impossible for hard-earned savings to be withdrawn in a lump sum.
Any lump sum withdrawn at retirement above a minimum threshold (currently R25 000) is taxable. Between R25 000 and R660 000, the tax rate is 18%, between R660 000 and R990 000 it is 27%, and over R990 000, it is 36%.
How is your annuity taxed?
The remaining two-thirds of your savings received in the form of an annuity (pension) is taxable. But this would only be for the amounts that exceed certain thresholds published by the South African Revenue Service. For the current tax year (to end-February 2019), these thresholds are:
- Under 65: R78 150 per year
- Between 65 and 74: R121 000 per year
- 75 and above: R135 300 per year
For example, if your pension (annuity) was R20 000 a month at age 65, your tax rate would fall into the second bracket of 26%. The tax that you would pay is R2 079.31 per month leaving you with a net income of R17 920.69 per month.
Are early withdrawals possible?
The act does not affect what happens if you leave a provident (or pension) fund before retirement, either because of changing jobs, retrenchment or dismissal.
Also, the withdrawal of the entire amount of a pension or provident fund is still possible before retirement, although this is very ill-advised. (For retirement annuities, withdrawals are only possible on early retirement due to ill-health or on emigration.)
Tax-free savings accounts
Lastly, tax-free savings accounts are another element those saving for retirement need to consider. The tax-free savings account structure offers an interesting way to supplement structured retirement savings. It would be difficult to argue that a tax-free savings account is an absolute alternative to products like retirement annuities and pension funds.
Tax-free savings accounts allow the investment of R33 000 a year (up to a lifetime limit of R500 000, likely to be revised upward in future). These investments can be made in a number of different asset classes and all gains on these investments (capital gains, dividends and interest) are completely tax-free.
However, contributions are not tax-deductible, which is why tax-free savings accounts should only be considered as a way to supplement whatever retirement savings an individual already has, especially if they are at (or near) the contribution limit of 27.5% of taxable income or remuneration.
With so many complex factors to consider and a very long time horizon, it is important to get professional investment advice for your retirement savings, as well as the tax impact of choices you will need to make.
Disclaimer: This article is meant only as information and should not be taken as financial advice. For tailored financial advice, please contact your financial adviser.
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Complete Guide to NSFAS Online Loan Application for South African Students (2025)
If you are a South African student looking to pursue higher education but are facing financial difficulties, the National Student Financial Aid Scheme (NSFAS) is one of the most accessible funding options available. NSFAS provides financial aid in the form of bursaries and loans to qualifying students at public universities and TVET colleges in South Africa.
This guide will walk you through everything you need to know about the NSFAS loan application process, from eligibility requirements to application steps and frequently asked questions.
📌 What is NSFAS?
The National Student Financial Aid Scheme (NSFAS) is a government-funded financial aid scheme aimed at helping students from low- and middle-income households to access tertiary education without the burden of upfront fees.
NSFAS offers both bursaries and income-contingent loans:
- Bursaries: For eligible students who meet academic and household income criteria (especially for TVET and university students).
- Loans: For students who do not meet all bursary criteria or who are pursuing postgraduate qualifications not funded under bursary schemes.
✅ Who Qualifies for an NSFAS Loan?
To qualify for an NSFAS loan (especially for postgraduate students or programs not funded under the bursary system), you must:
- Be a South African citizen.
- Be financially needy, with a household income of less than R350,000 per year.
- Have a valid South African ID.
- Be enrolled or accepted to study at a public university or TVET college.
- Not be funded through another bursary program that covers all expenses.
- Maintain satisfactory academic progress (returning students).
📚 Courses Funded by NSFAS
NSFAS primarily funds undergraduate qualifications, but certain postgraduate programs (e.g., PGCE, postgraduate diplomas in education, and professional courses like LLB) may be considered under the NSFAS loan scheme, not bursaries.
If you’re studying:
- Undergraduate degree or diploma: You are likely eligible for a full NSFAS bursary.
- Postgraduate study: You may qualify for a loan, depending on the course and funding availability.
📄 Required Documents for NSFAS Application
When applying, make sure you have the following documents scanned and ready:
- Certified copy of your South African ID or Smart Card.
- Parent(s) or guardian(s) ID documents.
- Proof of income (latest payslips, UIF, or affidavit if unemployed).
- Consent Form signed by your parent(s)/guardian(s) to allow NSFAS to verify income.
- Proof of registration or acceptance at a public institution.
- Academic transcripts (for continuing or postgraduate students).
🖥️ How to Apply for an NSFAS Loan Online
Step-by-Step NSFAS Online Application Process (2025)
-
Visit the NSFAS Website
Go to: https://www.nsfas.org.za
-
Create an Account
- Click on “MyNSFAS” and register your profile.
- You’ll need a valid email address and South African cellphone number.
- Choose a strong password and verify your account via email or SMS.
-
Login and Start the Application
- After registration, log in to your MyNSFAS account.
- Click on “Apply” to begin a new application.
-
Fill in Your Personal Details
- Input your ID number, name, surname, and other details exactly as they appear on your ID.
- Provide household income information and living arrangements.
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Upload Required Documents
- Upload all supporting documents in PDF or JPEG format.
- Each document must be clear and under the size limit specified.
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Submit Your Application
- Review your application for accuracy.
- Click “Submit” and wait for a confirmation message.
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Track Your Application
- Log in regularly to check your application status.
- You will be notified via SMS and email at each stage of the process.
🗓️ Important NSFAS Dates (2025)
- Application Opening Date: September 1, 2025
- Application Deadline: January 31, 2026
- Appeals Period: February 2026 (if rejected)
- Disbursement: After registration and approval
Note: Dates are subject to change; always confirm on the official NSFAS website.
💸 What Does the NSFAS Loan Cover?
NSFAS funding typically includes:
- Tuition fees
- Registration fees
- Accommodation (if living away from home)
- Meals and transport
- Learning materials (e.g., textbooks)
For loans, repayment is only required once you start working and earn above a threshold (around R30,000 annually, but subject to change).
🔄 NSFAS Loan Repayment
Repayments are:
- Income-contingent – you only repay when you can afford to.
- Administered by DHET (Department of Higher Education and Training).
- Interest-bearing, but interest rates are low and favorable.
You can also apply for a partial loan conversion to a bursary if you perform well academically.
🔁 How to Appeal a Rejected NSFAS Application
If your application is rejected, you may submit an appeal via your MyNSFAS portal:
- Log into your MyNSFAS account.
- Click on “Track Funding Progress”.
- If rejected, click on “Submit Appeal”.
- Upload any missing or corrected documents.
- Provide a clear explanation or motivation.
📱 NSFAS Contact Information
- Website: https://www.nsfas.org.za
- Email: info@nsfas.org.za
- Toll-Free Number: 08000 67327 (Monday–Friday, 8 AM–5 PM)
- Twitter: @myNSFAS
- Facebook: NSFAS
📝 Final Tips Before Applying
- Apply early to avoid system overload near the deadline.
- Use your own email and cellphone number (do not use someone else’s).
- Double-check that all your documents are certified and legible.
- Keep a copy of your submission confirmation for reference.
By following this guide, you can confidently apply for NSFAS funding and move one step closer to achieving your academic and career dreams—without the burden of immediate financial pressure.