Publications
Partners
Johannesburg - BankservAfrica data on pensions continues to show that pension increases are outpacing inflation, with growth of 3.8% after inflation is taken into account.
Both the average and the typical pensions increased by 9.2% last month according to the BankservAfrica Private Pension Index (BPPI) released on Wednesday.
The average pension stood at R5 873, and the typical pension was R3 904 for the month of August 2015.
“Pension assets are no longer growing at over 9% though, so there will come a time when 9% plus increases will no longer be possible. But there is no clear indication of when that might occur,” said Mike Schüssler, Chief Economist at Economists dotcoza.
In 2013, the Financial Services Board reported that close to 810 000 people were receiving private pensions and, with the BPPI registering over 655 000 pensions every month, it is clear that this sample is 81% of the pensioner group in the country.
The fastest growing age group in South Africa is those over 65 years old, a group which – according to the latest population estimates – grew by 3.3% over the last 12 months, while the overall population only grew by 1.7%.
The population over 65 years old has been growing by at least 3% for 12 years, and is becoming increasingly important as they make up a large portion of the economy.
Only around 5% of this group still work, with the rest being on pension. However in general this section of the population is more inclined to vote and to influence their communities for the better.
Both the average and the typical (median) pensions increased by 9.2% last month according to the BPPI.
The average pension stood at R5 873 while the typical pension was R3 904 for the month of August 2015.
This means real pensions (after inflation) increased by 3.8%. The increases in private pension payments have generally been higher than the increases on salaries for working people, although pensions are still less than half of what salaries are.
Pension assets are in general no longer growing at over 9% and so, while it is unclear how long the pension increases can continue to outpace inflation, there will come a time when these 9% plus increases will no longer be possible.
The average private pension paid into a bank account stands at 44.8% of the average salary - so the growth in pensions have kept pensioners near the 45% of salaries.
Just over half (51%) of pensioners received less than R4 000 in their bank accounts in August 2015, but the growth in pensions has seen the pensioners who get paid between R10 000 and R 25 000 grow by 53% since January 2013.
The highest growth in numbers has been those who received pensions between R25 000 and R50 000 in August 2015 – this was up 59% from January 2013.
The numbers are still small, but this category has continued to grow from roughly 4 600 pensioners to about 7 400 pensioners in those 20 months.
The table below, in broad terms, shows that the share of pensioners getting less than R4 000 per month has declined 9% in just over two-and-a-half years.
Those receiving between R10 000 and R100 000 grew from about 11% of the sample to nearly 17% of the sample.
Additionally, many pensioners can still claim a government grant to help supplement their income from private savings and pensions.
As a result, we believe that the number of pensioners who have a total income of R10 000 or more every month is in fact larger than can be seen directly in the BPPI index.
