With the tax year-end upon us on 28 February 2026, now is the time to make smart financial decisions. One of the most powerful – and often overlooked – moves is investing in a retirement plan.
How can saving for retirement help you pay less tax?
When you invest in a retirement plan, you’re doing more than just saving for your future – you’re also getting valuable tax benefits today. These plans are designed to encourage long-term saving by rewarding you with tax deductions and tax-free growth on your investments.
How much tax can you save with a retirement plan?
You can claim a tax deduction of up to 27.5% of your taxable income or remuneration each year, to a maximum of R350 000.
This means that the more you contribute to your retirement plan, the less tax you pay now – while continuing to build wealth for the future.
Here’s an example: If you earn R600 000 per year and contribute R165 000 (27.5%) to a retirement plan, you can claim that full amount as a tax deduction. That’s R165 000 you would have paid tax on, now invested in your retirement plan where it grows tax-free until retirement.
What are the tax benefits of retirement savings growth?
All growth within your retirement plan – including interest, dividends and capital gains – is completely tax?free.
This means your money compounds efficiently over time, helping your retirement savings grow significantly by the time you retire.
You’ll only pay tax when you start drawing an income at retirement, and even then, the first portion of your lump sum is often tax?free.
Which type of retirement plan is right for you?
Retirement annuities (RAs) and preserver plans are among the most effective ways to save for retirement, each meeting a different investor need.
Here’s how they differ:
- Retirement annuity (RA): A tax?efficient investment that helps you save for retirement independently, or in addition to your employer’s retirement fund.
- Preserver plan: If you leave an employer due to resignation, retrenchment or company closure, a preserver plan allows you to keep your accumulated savings invested, ensuring that your retirement funds remain protected and continue to grow.
Every person’s financial and retirement goals are unique. That’s why it’s best to speak to a qualified financial advisor who can help you select the right plan and make the most of your tax benefits.
What’s a smart tax hack for retirement savings before year-end?
If you receive a bonus or tax refund before 28 February, consider using it to top up your retirement savings in your retirement annuity. Or, if you’re new to retirement planning, you could use that money to kick-start your savings by investing in a retirement plan.
It’s one of the easiest ways to get tax benefits now, while boosting your retirement savings for the future.
How can Discovery Invest help me grow my retirement savings?
Discovery Invest rewards you for making smart, long?term investment choices. Whether you’re a new or existing client, you can benefit from valuable boosts designed to help your retirement savings grow even further.
Existing clients can take advantage of our current offers:
These offers are available until 27 February 2026.
New clients can also start their retirement savings journey with a boost:
- If you invest in one of our lump?sum retirement annuities, or transfer to one of our Preserver Plans, you may qualify for an investment boost of up to 20% for investing for longer. These boosts form part of Discovery’s shared-value model, which rewards you for healthy financial behaviours.
To find out how much you could save – and how to make the most of your tax benefits – speak to your financial advisor today.
This document is meant only as information and should not be taken as financial advice. For tailored financial advice, please contact your financial advisor. Discovery Life Investment Services (Pty) Limited, registration number 2007/005969/07, branded as Discovery Invest, is an authorised financial services provider. All life insurance products are underwritten by Discovery Life Limited, registration number 1966/003901/06, a licensed life insurer and an authorised financial services provider and registered credit provider, NCR registration number NCRCP3555. All boosts are offered through the insurer, Discovery Life Limited. The insurer reserves the right to review and change the qualifying requirements for boosts at any time. Product rules and terms and conditions apply.
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