Your retirement plan can be your smartest tax move

With tax year-end upon us on 28 February 2026, now is the time to make smart financial moves. One of the most powerful - and often unknown - 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.

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 every 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 still growing your wealth for the future.

Here's an example: If you earn R600,000 a 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 working for your future in a retirement plan, where it grows tax-free until retirement.

What are the tax benefits of retirement savings growth?

The growth in your retirement plan - all the interest, dividends and capital gains - is completely tax-free. This means that your money compounds faster over time, helping your retirement savings grow much bigger 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 and preserver plans are among the most effective ways to save for retirement, each meeting a different investor need. Here's the difference between the two:

• Retirement annuity (RA): This is a tax-efficient investment that helps you save for retirement independently or in addition to your employer's fund.
• Preserver plan: If you're leaving an employer due to resignation, retrenchment or company closure, a preserver plan keeps your accumulated savings invested - ensuring your retirement funds stay 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 adviser 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 2026, consider using it to top up your retirement savings in your retirement annuity. Or, if you're new to retirement planning, use that money to kickstart 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.

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 earn valuable boosts that can grow your savings even further.

Existing clients can take advantage of our current offers:

• Get enhanced boosts of up to 25% on extra contributions to your existing lump-sum Retirement Annuity.
• If you have a Discovery Retirement Optimiser, you can get a boost of up to 50% on extra contributions.

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 can qualify for an investment boost of up to 20% for investing for longer. These boosts are part of Discovery's shared-value model, which rewards you for healthy financial behaviours.

To learn more about how much you can save - and how to make the most of your tax benefits - speak to your financial adviser today.