The South African Revenue Services (SARS) has announced that you are now allowed to take as a lump-sum payment the entire capital of a retirement annuity or pension fund if the capital amount does not exceed R25 200.
In other words, you are not obliged to purchase an annuity (pension). For any capital amount over R25 200, you are required to use two-thirds of the sum to buy an annuity.
One-third can be taken as a lump sum and may be subject to tax.