Saving for retirement in Namibia comes with tax relief: contributions to approved funds are deducted from your income before your tax is worked out. That makes them cheaper than they look.
What counts
Section 17 of the Income Tax Act allows deductions for:
- contributions to an approved pension or provident fund;
- contributions to a retirement annuity;
- premiums on an education policy for a child; and
- an employer's premiums on certain key-person risk policies.
Together they're limited to N$150,000 a year, about N$12,500 a month (section 17(2), from 1 March 2022). There's no percentage-of-income limit.
What it really costs
Each dollar you contribute comes off your taxable income, so it saves tax at your top rate. Take a salary of N$40,000 a month and a 7% contribution of N$2,800:
- Without it, PAYE is N$7,950 a month.
- With it, PAYE falls to N$7,166, a saving of N$784.
- So the contribution really costs you N$2,016 a month, not N$2,800.
At higher pay the saving is bigger, because your top rate is higher. Our pension contribution calculator shows the real cost at your own salary.
Paying in a little more
Staying with N$40,000 a month: an extra N$1,000 a month saves N$280 of PAYE, because that salary's top rate is 28%, so it costs you N$720. You could add up to N$9,700 a month before reaching the limit: N$12,500 a month, less the N$2,800 you already pay.
Above the limit
On a salary of N$200,000 a month, a 10% contribution is N$20,000 a month, N$240,000 a year. Only N$150,000 of that is deductible, so the other N$90,000 gets no relief. The contribution still builds your savings; it just doesn't save more tax.
If you pay into more than one product, say a pension fund through work and a retirement annuity of your own, add them together: they share the one limit.
Below the tax threshold
The first N$100,000 a year of taxable income isn't taxed. If you earn less than that, a contribution saves no tax, so it costs its full amount. It's still worth making for your future; the relief simply starts once you pay tax.
Social security
Social Security Commission contributions are separate. They don't reduce your taxable income, and a pension contribution doesn't change them.
Sources
- Income Tax Act 24 of 1981, consolidated (NamRA)
- Income Tax Amendment Act 4 of 2024 (Government Gazette 8442)
This is general information, not tax, legal or financial advice.