Looking for and answer to How is lump sum pension payout calculated? Lump-sum payouts are calculated by determining the present value of your future monthly guaranteed pension income, using actuarial factors based on age, mortality tables published by the Society of Actuaries, and the Internal Revenue Service’s minimum present value segment rates, which are updated monthly.

That means there’s an inverse relationship between interest rates and lump-sum pension payouts. When rates are low, the calculated payout would rise because it takes a higher initial sum to arrive at the same future value of your lifetime monthly payments. As interest rates climb, as they are doing now, it takes a lower initial sum to arrive at the same future value of those monthly payments, so the lump-sum buyout decreases.

Retirement Lump Sum Benefits

Tax relief on retirement lump sum benefits is allocated once in a lifetime in other words if it’s used up you can’t claim it again. For example, if a person used R300 000 of the R500 000 with the first lump sum, the balance left is R200 000 and once this is used up this relief is not available again. For more details on how it works, read our Budget Tax Guide.

Withdrawal Benefit

2026 tax year (1 March 2026 – 28 February 2026) – No changes from last year

Taxable income (R)	Rate of tax (R)
1 – 25 000	0%
25 001 – 660 000	18% of taxable income above 25 000
660 001 – 990 000	114 300 + 27% of taxable income above 660 000
990 001 and above	203 400 + 36% of taxable income above 990 000

2026 tax year (1 March 2021 – 28 February 2026) – No changes from last year

Taxable income (R)	Rate of tax (R)
1 – 25 000	0%
25 001 – 660 000	18% of taxable income above 25 000
660 001 – 990 000	114 300 + 27% of taxable income above 660 000
990 001 and above	203 400 + 36% of taxable income above 990 000

2021 tax year (1 March 2020 – 28 February 2021) – No changes from last year

Taxable income (R)	Rate of tax (R)
1 – 25 000	0%
25 001 – 660 000	18% of taxable income above 25 000
660 001 – 990 000	114 300 + 27% of taxable income above 660 000
990 001 and above	203 400 + 36% of taxable income above 990 000

2020 tax year (1 March 2026 – 29 February 2020) – No changes from last year

Taxable income (R)	Rate of tax (R)
0 – 25 000	0%
25 001 – 660 000	18% of taxable income above 25 000
660 001 – 990 000	114 300 + 27% of taxable income above 660 000
990 001 and above	203 400 + 36% of taxable income above 990 000

2026 tax year (1 March 2018 – 28 February 2026)

Taxable income (R)	Rate of tax (R)
0 – 25 000	0%
25 001 – 660 000	18% of taxable income above 25 000
660 001 – 990 000	114 300 + 27% of taxable income above 660 000
990 001 and above	203 400 + 36% of taxable income above 990 000

2018 tax year (1 March 2017 – 28 February 2018)

Taxable income (R)	Rate of tax (R)
0 – 25 000	0%
25 001 – 660 000	18% of taxable income above 25 000
660 001 – 990 000	114 300 + 27% of taxable income above 660 000
990 001 and above	203 400 + 36% of taxable income above 990 000

2017 tax year (1 March 2016 – 28 February 2017)

Taxable income (R)	Rate of tax (R)
0 – 25 000	0%
25 001 – 660 000	18% of taxable income above 25 000
660 001 – 990 000	114 300 + 27% of taxable income above 660 000
990 001 and above	203 400 + 36% of taxable income above 990 000

2016 tax year (1 March 2015 – 29 February 2016)

Taxable income (R)	Rate of tax (R)
0 – 25 000	0%
25 001 – 660 000	18% of the amount above 25 000
660 001 – 990 000	114 300 + 27% of the amount above 660 000
990 001 and above	203 400 + 36% of the amount above 990 000

2015 tax year (1 March 2014 – 28 February 2015)

Taxable income (R)	Rate of tax (R)
0 – 25 000	0%
25 001 – 660 000	18% of the amount above 25 000
660 001 – 990 000	114 300 + 27% of the amount above 660 000
990 001 and above	203 400 + 36% of the amount above 990 000

Retirement & Death Benefits or Severance Benefits