Question:
Can you please tell me if there is a maximum amount that one can contribute to a pension fund.
Answer:
Paul. No, in theory there is not, but in practice, there may be limits imposed by the fund rules, and there is a limit to the tax deduction you will get. Talking pension funds specifically (not provident of retirement annuity funds) the employer may deduct up to 20% of an employee's approved remuneration, and the employee may deduct a further 7.5%. From 1 March 2016 (or possibly 1 March 2017), the employee may deduct total contributions (made by either the employer or the employee) up to 27,5% of their gross remuneration or taxable income (whichever is the higher) to a pension, provident or retirement annuity fund. This is subject to an annual limit of R350 000. Any employer contributions is neutralised by way of a fringe benefits tax.
