South Africans' take-home pay has increased by 1.5% above inflation,
while privately banked pensions increased by 5%, according to the latest
BankservAfrica Take-Home Pay Index.
This was mainly due to the
revised personal income tax, which came into effect at the beginning of April,
providing some relief for employees earning below R432 300 per annum.
This revision is not the main driver of salary growth. But for the first
time in two years, the partial tax relief of 3.2% for those earning below R432
300 per annum and the adjustment of the primary tax rebate has helped South
Africans’ take-home pay increase slightly more than in 2017, according to the
index report.
This year’s personal income tax
relief was far more than the 1% in the 2017 tax year, and also went slightly
further than the 2016 tax relief.
The average take-home salary
was R14 681 in nominal terms for April 2018, representing a 5.8% increase on
April 2017.
The BankservAfrica Take-Home Pay Index in real terms shows the average salary
was R13 909, 1.5% higher than a year ago. This is the seventh consecutive month
of positive salary increases.
The increases may, however, not remain as strong as the public servants’ wage
negotiations are still taking place, according to the index report.
There are also indications that
the implementation of the increases will be delayed, which will have a negative
impact on the positive take-home pay trend in the coming months.
The average take-home pay
signals retail sales and overall consumer spending should be strong in April.
However, the VAT increases may have a dampening impact, the index report
cautions.
South African employees have
not fared badly when inflation trends lower. Therefore, as inflation is likely
to trend upwards for a few quarters, the positive take-home pay increases may
slow somewhat.
Pensions
remain strong
BankservAfrica’s Private
Pension Index (BPPI), which tracks about 670 000 pensions paid across the
banking system, shows that real pension increased by 5%.
In current prices, private pensions increased by 9% on a year-on-year basis.
This strong performance is surprising, as investment returns have not always
been as robust over the last few years, according to the index report.
"However, as interest
rates are higher than inflation and bond yields, it may be that a more
conservative approach to pension investments have paid off. Pensioners are more
likely to have a conservative approach to their investments," the report
states.
In nominal terms, the average
pension increased to R7 096 in April 2018. This is the third consecutive month
in which the average pension payment was above R7 000 for the month.
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