Pension fund South Africa

Pension funds in South Africa

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Learn more about SASSA grants including how to set up a South African pension, SASSA payment dates and where to find a retirement calculator for South Africa.

Certain foreigners who live and work in South Africa are entitled to claim a South African pension, however, as it is income-based many expats typically don’t quality. Thus many foreigners of retirement age in South Africa rely on private or occupational-based pensions.

There is currently no universal South African pension system provided by the state. Social security in South Africa doesn't cover an insurance-based state pension scheme, although there are plans to bring one in at some point in the future. Foreign residents in South Africa can apply for a SASSA grant only if they have become South African citizens or secured permanent residence. Those that are not eligible for the grant-based pension in South Africa can opt for a contributory occupational-based or private retirement fund.

This guide to Pension funds in South Africa includes:

The South African Pension System

The South African pension system is based on a three-pillar system:

1) a non-contributory means-tested SASSA grant provided to the majority of pensioners

2) various insurance-based employee and company pensions and provident funds

3) private pensions and insurance arrangements.

The SASSA Grant for Older Persons is the state pension provided to approximately 75 percent of the population. It is funded through tax and is means-tested, provided to those with income and assets below a certain threshold (explained below).

Employer-based pensions in South Africa are limited to those in formal employment. The largest of these is the Government Employees Pension Fund (GEPF, www.gepf.gov.za) for those working in the public sector. The majority of employees working in the formal private sector will also have contributions-based pensions.

Who can claim a South African pension?

The SASSA Grant for Older Persons is available to South African citizens and foreigners who have gained citizenship or permanent residence status in South Africa. It is also available to those granted political leave to remain. To qualify for this South African pension, you must have earnings of less than R69,000 a year (or less than R138,000 if living with a spouse) and have assets worth no more than R990,000 (or no more than R1,980,000 if living with a spouse). Information regarding SASSA payment dates can be found here.

As the pension in South Africa provided by the state is a means-tested grant rather than contribution-based, you don't have to have lived or worked in South Africa for any period of time to claim the South African pension. There have been discussions about abolishing the means test or changing the threshold to provide incentives for private retirement savings and thus reduce the burden on the state.

SASSA payment dates

Pension age in South Africa

Retirement age in South Africa is currently 60 for both males and females, having been reduced from 65 for males in 2010. However, to cope with an ageing demographic and other changes, this could be raised in the future as seen in other countries.

Those in the public sector receiving a South African pension through the GEPF may have the option of retiring early if they have given at least 10 years of service.

South African pension rates

The current South African pension rates for the SASSA grant are a maximum of R1,500 per month, rising to R1,520 per month for those aged over 75. Grants are paid by SASSA electronically into the recipient's bank account, by cash at the local SASSA office, or direct to the institution for those that live in care or residential accommodation.

Funding for the SASSA grants comes from national income tax and is a redistributive measure to ensure that those without sufficient sources of revenue in old age are guaranteed a minimum income.

Company and private pensions in South Africa

As there is no universal and comprehensive South African pension system provided by the state, South African citizens that don't meet the requirements of the means-test pension are limited to employment-based or private options for a South African pension.

Occupational retirement plans are offered to those employed in the formal sector. Coverage is quite high, estimated at between 66 and 84 percent of those employed in this sector. However, as large numbers of South African residents are either unemployed or informally employed, this isn't an option open to many.>

Those employed in South Africa's public sector are entitled to membership of GEPF, which is Africa's largest pension fund with more than 1.2 million members and assets worth R1.6 trillion.>

GEPF offers its members a range of benefits including a pension upon retirement at the age of 60 (or earlier if due to ill health), resignation benefits to those who resign or are discharged due to misconduct, and death benefits paid to surviving spouses or orphans (including funeral costs). As GEPF payments are contributions-based, the pension rate paid depends on the amount of contributions made and length of employment. A GEPF calculator is available here to help you calculate your benefits .

All GEPF members pay 7.5 percent of their salary towards their pension, with employers contributing 13 percent.

According to the South African Financial Services Board, there are more than 5,000 occupational and private retirement funds in South Africa, with more than 15 million members and R3.2 billion of assets. Investment is regulated by the registrar of Pension Funds.

Employer contributions to state-approved pension funds are tax deductible up to 10 percent. Income received from pension annuities is taxed, while lump sum payments are partially tax-free and partially taxed. Benefits received from a retirement fund in South Africa for which contributions did not qualify for tax exemption may be paid out tax free. For more information, see here.

Retiring in South Africa

Pensions in South Africa for foreigners

Foreign residents can apply for a pension in South Africa through the SASSA grant if they have been granted South African citizenship or permanent residence. Those that work in formal employment will be eligible for an occupational pension, or a GEPF if a public sector employee, provided they have made sufficient contributions.

It may also be possible to transfer private pension earnings without incurring charges through an overseas pension scheme. For UK pensioners in South Africa, this is possible through a Qualifying Recognised Overseas Pension Scheme (QROPS) commonly used by UK expats who have invested in a private pension scheme. Read this article to see whether a QROPS might be a suitable option for you.

Survivor's pension in South Africa

A survivor's pension can be paid out under the South African pension system to a surviving spouse or children if the deceased suffered a fatal work injury with an employer who was paying into a work injury insurance scheme. The survivor’s pension rate is 40 percent of the permanent disability pension amount (which itself is 75 percent of the worker's salary) for the widow/widower and 20 percent of the permanent disability pension amount for each unmarried orphan under 18 years old. A funeral grant is also provided.

The GEPF employment fund pays a death benefit to surviving spouses or children of members that die while in service or within five years of becoming a pensioner. This is paid either as an annuity or a lump sum.

A dependant’s benefit can also be paid out under the South African pension system to a surviving spouse or children if the deceased made contributions to the Unemployment Insurance Fund (UIF). The spouse can claim even if he or she is in employment themselves. The pension rate is between some 40–60 percent of the deceased's salary, depending on contributions, paid out for a maximum of 34 weeks.

How to apply for a pension in South Africa

To apply for a SASSA grant-based means-tested South African pension, you need to visit your local SASSA office and submit an application.

You need to bring your 13 digit bar-coded identity document (ID). If you don't have an ID, you will need to provide a sworn statement signed by a reputable person (eg. a councillor, religious minister, school principle etc.) who can verify your name and age.

You also need to provide the following:

  • proof of residence
  • proof of marital status (if applicable)
  • proof of income/savings
  • proof of assets and pension (if any)
  • bank statements for the last three months
  • if you were employed, your Unemployment Insurance Fund book or discharge certificate from your last employer
  • if your spouse died within the last five years, a copy of the will and accounts where applicable


To apply to join GEPF, you need to complete a Z125 form which is available here.

An online retirement calculator for South Africa can be found here.

Useful information


Click to the top of our guide to pension funds in South Africa.

 

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