The Government Employees Pension Fund (GEPF) has explained why pension payments are subject to tax
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The Government Employees Pension Fund (GEPF) has explained why pension payments are subject to tax, saying this is because the South African Revenue Service (SARS).
The fund said pension contributions made during a member’s working years are generally tax-deferred, meaning tax is not paid at the time of contribution.
"Pension payments are taxed because they are considered a form of income by the South African Revenue Service (SARS). When you retire and start receiving a pension, SARS treats these payments similarly to salaries earned by working individual," the fund said.
"The principle behind this is that during your working years, contributions made to your pension fund where tax deductible and thus where tax-deferred, meaning you did not pay taxes on the contributions. Therefore, when these funds are withdrawn as a pension, they are subject to income tax. The specific rate at which your pension is taxed is determined by SARS".
The fund added that if pensioners receive income from more than one source, all applicable income must be declared and taxed in line with SARS regulations.
"The tax deducted is specific to the GEPF pension paid and not any other additional income that you receive. If a pensioner or beneficiary is receiving income from more than one source, then the tax would need to be paid on such income as well if applicable".
IOL previously reported that the fund confirmed a 3.5% increase for pensioners from April 2026, based on the latest inflation figures. The adjustment is meant to match the rise in the cost of living.
The fund said the increase, which took effect from 1 April 2026, applies in full to pensioners who retired on or before 1 April 2025, while those who retired after that date will receive a pro-rated adjustment based on the number of months they have been receiving a pension.
"Pensioners who retired on or before 1 April 2025 are to receive an increase of 3.5%. Pensioners who retired after 1 April 2025 are to receive a proportionate increase based on the number of months they have been in receipt of pension up to 31 March 2026," the fund said last month.
mthobisi.nozulela@iol.co.za
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