By Selloane Ntshonyane
- Retired people with more than one living annuity from the same provider may not get all their money at once if it totals over R150,000.
- The new rule is only a proposal for now and must still be approved by Parliament before it can become law.
Some retired people may not be able to take all their living annuity money in one cash payment under a proposed new tax rule.
The change is part of the 2026 Draft Taxation Laws Amendment Bill.
It deals with people who have more than one living annuity with the same insurance company or retirement fund.
A living annuity is money from a person’s retirement savings that is used to give them an income after they retire.
Under the proposed rule, all living annuities held with the same provider will be added together to decide whether the person is below or above the R150,000 limit.
This means having two small living annuities will not necessarily allow someone to take both as cash.
Here is a simple example.
A retired person has one living annuity worth R100,000 and another worth R100,000 with the same company.
Each amount on its own is below the R150,000 limit.
But when the two are added together, they come to R200,000.
Because the total is more than R150,000, the person would not be allowed to take all R200,000 at once under the proposed rule.
Instead, the money would continue to be used to pay them an income during retirement.
The South African Revenue Service says a living annuity worth R150,000 or less may be taken as one cash payment instead of being paid out as retirement income.
The limit used to be R125,000 but increased to R150,000 from 1 March 2026.
National Treasury says the proposed change is meant to stop people from using several smaller living annuities to take their retirement savings as cash.
The concern is that people could spend too much of their retirement money at once and later be left without enough money to support themselves.
Lize de la Harpe, a senior legal adviser at Sanlam, said the South African Revenue Service already looks at the total amount when a person has more than one living annuity with the same company or fund.
She said the proposed law would make the rule clearer.
It is also aimed at helping retired people keep enough of their savings to provide them with an income during retirement.
For people with more than one living annuity, the important figure will therefore be the total amount held with the same provider.
Someone may look at two smaller amounts and think both can be taken as cash.
But if those amounts together are more than R150,000, the person may not be able to take all the money at once.
The change is not law yet.
It is still only a proposal in the draft bill and must go through Parliament before it can become law.
This means retired people do not need to make any decisions based on the proposed rule yet.
Pictured above: The proposed tax change could affect retired people who have more than one living annuity with the same provider.
Image source: File.
