Comparing retirement plans in South Africa

• A retirement annuity is a highly tax-efficient way to save
• You can deduct up to 27.5% of taxable income (capped at R430,000/year)
• The biggest differences between providers are fees, flexibility, and investment approach
• Big brands (such as FNB, Discovery, Momentum) sometimes bundle retirement with broader financial ecosystems
• Important: retirement planning doesn’t exist in isolation. The cover you have in place - like Life Insurance, Medical Aid, and Gap Cover - helps protect your savings from being used up when the unexpected happens.

Retirement annuities and investments at a glance

Note: The comparison below is illustrative, based on selected providers and not exhaustive. Products differ in structure, advice model, fees and features, and may not be directly comparable.

Retirement annuity vs provident fund: what’s the difference?

A retirement annuity RA is a personal retirement savings option in the South African market, while a pension fund is usually employer-sponsored; both help build a pension, but they differ in how they’re managed and when you can access the money. Contributions are invested across various assets and the money can be accessed at retirement (minimum age 55), where a portion can be taken as a lump sum and the remainder is used to provide a regular income.

A provident fund, on the other hand, is a specific type of retirement fund, and employer-linked arrangements such as a pension fund or provident fund are typically set up through work, with contributions often deducted from your salary.

The key differences:

• Who sets it up. A retirement annuity is a personal retirement investment that is independent of your employer; unlike an employer plan, it is not tied to your job and contributions can usually be increased, reduced, or paused.
• Access to money at retirement. These are some of the key advantages of an RA: contributions are tax-deductible, which can reduce your taxable income, and at retirement up to one third may be taken as cash while the balance must be used to buy an annuity that provides a steady income.
• How you join. A pension or provident fund is usually linked to your job, set up for employees, and managed by trustees, while a Retirement Annuity is taken out personally.

What are you choosing when you choose a retirement plan?

You can think of a retirement plan as a plan that shapes how your money grows over time, how much you pay along the way, and how your contributions are managed.

Most comparisons focus on past performance and projected returns. That’s useful, but the better question is how the plan allocates money across asset classes, manages risk, and controls fees over time. Asset allocation is often the main factor shaping long-term outcomes, because it helps determine how money is split across different asset classes such as equities, bonds, property, and cash, which can also help a portfolio benefit from different economic cycles.

A suitable investment strategy will usually change over the investment period, with more growth exposure early on and gradual risk reduction as you near retirement age.

What feels like a simple product choice at the start ends up shaping how your money is handled for decades. And that has a bigger impact than most people expect.

A quick summary of retirement savings basics

A retirement annuity is designed to do one thing well: help you accumulate savings in a structured, tax-efficient way over the long term.

• You contribute regularly, either monthly or through occasional lump sums
• That money is invested across a mix of assets such as equities, bonds, property and cash, often through options like balanced funds, and under Regulation 28 it must stay diversified while limiting equity and offshore exposure
• Contributions are tax deductible up to a defined limit, which makes a noticeable difference over time

When you reach retirement, a portion of what you’ve put away can be taken as a lump sum, while the rest is used to generate a regular income.

Speaking of tax free options

A retirement annuity is considered tax-efficient because it reduces your tax burden both while you’re saving and while your money is growing.

Contributions to a retirement annuity are tax-deductible (up to 27.5% of your taxable income, capped at R350,000 per tax year), which means part of what you invest would have gone to SARS anyway. In practice, this lowers your taxable income and can result in an immediate tax saving or refund, effectively boosting the amount you’re able to invest.

For example, if you contribute R1,000 and your marginal tax rate is 36%, you could get R360 back from SARS and pay less tax overall, so the contribution effectively costs you R640.

While tax does apply when you retire and start withdrawing, it’s often at a lower rate than during your working years, which further improves overall efficiency.

Let’s take a closer look

Note: The comparison below is illustrative, based on selected providers and not exhaustive. Products differ in structure, advice model, fees and features, and may not be directly comparable.

FNB Retirement Annuity

• Minimums: From ±R300/month or lump sum
• Setup: Fully online via FNB app/online banking; advisor optional
• Contributions: Seamless debit from FNB account
• Funds: Access to unit trusts via FNB/Ashburton platform
• Rewards: Earn eBucks (linked to overall FNB product usage)

Discovery Retirement Annuity

• Minimums: From ±R750–R1,750/month depending on term
• Setup: Online with guidance or via financial advisor
• Funds: Wide range of underlying unit trusts and portfolios
• Rewards: Linked to Vitality – consistent contributions and good financial behaviour can unlock boosts/rewards
• Structure: Often portfolio-based rather than fully DIY

Momentum Retirement Annuity

• Minimums: Typically ±R500–R1,000/month depending on product
• Setup: Primarily through a financial advisor
• Funds: Broad selection including unit trusts and structured/smoothed bonus options
• Focus: Long-term planning with adviser support for clients across the retirement journey
• Fees: Can include advice and product layers

10X Investments Retirement Annuity

• Minimums: From ±R500/month or lump sum
• Setup: Fully online, direct
• Funds: Passive index funds (pre-built portfolios), an idea that may suit an investor who wants a straightforward approach
• Fees: lower fees with transparent pricing and no hidden costs, which many people look for when choosing the best retirement annuity
• Flexibility: Simple, limited fund choice by design

Sygnia Retirement Annuity

• Minimums: From ±R500/month or lump sum
• Setup: Online direct or via advisor
• Funds: Index funds, ETFs, and multi-asset portfolios with offshore exposure, plus diversification across other investments within a Regulation 28-compliant retirement framework
• Flexibility: High – switch funds easily within platform
• Fees: Generally low (passive focus)

Allan Gray Retirement Annuity

• Minimums: Typically around R1,000/month (varies)
• Setup: Direct online or via advisor
• Funds: Actively managed funds (local and offshore)
• Approach: Long-term, valuation-driven investing
• Fees: Higher than passive options

Things to look out for:

Total fees

Look beyond the headline fee. Consider admin fees, fund management fees, and advisor fees, because even small percentage charges can affect outcomes and have a significant impact on the real value of your savings over time. High fees eat into capital, while lower fees leave more invested to compound for long-term growth.

The difference between 0.5% and 1.5%

It sounds small, but over decades, that gap can significantly reduce your final retirement value because compound interest works on the money that remains invested after fees.

Compounding works both ways

Just as returns compound over time, so do fees. The longer you invest, the bigger the impact.

Like-for-like comparisons

Two products may follow similar strategies, but costs alone can lead to very different outcomes.

Transparency

If it’s hard to understand what you’re paying, that’s a red flag. Clear, simple fee structures are easier to manage.

Advice vs DIY costs

Paying for advice can add value, but it should be clear what you’re paying and what you’re getting in return, and whether a financial adviser can help match the product and risk level to your finances.

Where you could be falling short

Most retirement plans are built on an implicit assumption that everything goes according to plan. In reality, disruptions are common. Illness, loss of income, or family responsibilities can interrupt even the most carefully structured plan. In South Africa, the rules for when you can withdraw retirement money are governed by law, including the newer two-pot system.

This is where protection products play a different role. While they don’t contribute directly to growing your wealth, they help preserve it as a practical benefit.

Imagine that someone in their 40s is contributing consistently to their retirement annuity. Then they’re diagnosed with a serious condition that requires surgery and ongoing treatment. Without additional cover, those costs come out of pocket. Contributions to the RA pause. In some cases, investments are reduced or stopped entirely to free up cash.

With Medical Aid and Gap Cover in place, most of those unexpected costs are absorbed. The disruption still happens - that’s unavoidable - but it doesn’t spill over into the retirement plan in the same way. Contributions continue, and the long-term trajectory stays largely intact. Cashing out a pension or provident fund when resigning can trigger significant tax and break the compounding that retirement savings depend on. At retirement, the remaining capital is usually used to buy either a life annuity, which offers a guarantee of income for life, or a living annuity, which allows more flexible drawdowns and investment growth.

Timing also matters. Securing cover earlier in life is generally simpler and more affordable. While options do exist later on, they tend to come with more limitations, which changes how effective they can be.

How Hippo helps

A strong retirement plan isn’t built by picking the “right” product. It’s built by making a few things work together over time, and for some people that includes retirement provision through employer-sponsored pension or provident funds that may offer matching contributions and tax advantages.

Growth alone is fragile: without protection in place, a single setback can force you to unwind years of disciplined saving. That’s where Hippo fits in.

Comparing retirement annuities is a starting point. But the real value comes from seeing how everything connects - your Life Insurance Cover, your Medical Aid Insurance , your long-term savings - and making sure they support each other, especially when healthcare costs can disrupt your plans if cover is missing.

This article is for informational purposes only and should not be construed as financial, legal, or medical advice. Coverage terms, pricing, and availability may vary. Always review policy documents carefully and confirm current pricing with suppliers before making any decisions.