Income and pensions still beat inflation, for now

expat-pension-UK

While the South African economic outlook for 2016 is bearish, banked incomes are still telling a positive story.

The BankservAfrica Disposable Salaries Index (BDSI) and BankservAfrica Private Pensions Index (BPPI) are excellent indicators of current retail spending and consumer behaviour and for now remain positive, BankservAfrica said today.

“According to the data seen passing through the BankservAfrica payment system last month, the average take-home pay in the formal sector has increased by 8.7% compared to last year. This means that, despite the inflationary increase, take-home pay also rose by about 2.3% above the inflation rate to an average of R13 511 in January 2016,” says Dr Caroline Belrose, Head of Knowledge and Risk Services at BankservAfrica.

Banked pensions on average increased by 6.9% on a year ago to R6 131. “The increase in pensions in the last two months has been at the same rate, but both are the slowest nominal increases since July 2014. Pension increases were still higher than inflation, but only by about 0.6%,” says Belrose.

However, the ability for salaries to stay ahead of inflation is expected to come under pressure as higher taxes and ‘bracket creep’ are likely to have a negative impact on take-home pay increases.

“By definition, ‘typical take-home pay’ or ‘typical bankable salary’ refers to the money that the person in the middle of a large group gets paid into a bank account. Instead of relying on the average for that group, this typical amount is often a better reflection of the changes in income, as the average may be pushed up due to a small percentage of highly paid earners getting large increases,” explains Mike Schüssler, Chief Economist at Economists dotcoza. “For four months in a row the typical salaries and pensions have increased at a higher rate than the average.”

Over the last two years – apart from a couple of anomalous months – the typical pension has outpaced the average pension by an average of 1.9%. The typical bankable pension has increased to R 4 335 per month which is nearly R855 more than in January 2014. Meanwhile, the typical salary reached R9 894 per month, although it is important to be mindful that this number may be slightly disproportionately high due to sales commissions that get paid in January after the December retail boom.

Although pensioners in this dataset still only get about 44% of the average take-home salary, the typical pension has increased at a faster rate than the take-home salary for the past 11 months.

“It will also be interesting to see the role that the stock market has on pension pay-outs as we continue into 2016 with a weak equity market. The data suggests that that pensions change on past market performance so weak markets may still have a delayed impact on pensions,” concludes Schüssler.



Latest


28 Sep 2020
An agile workforce is key to navigating the pandemic

By: Donné Nieman, Commercial Manager at Workforce Staffing Applications for the UIF/Temporary Employment Services (TES) grant to alleviate employee layoffs…

An agile workforce is key to navigating the pandemic

By: Donné Nieman, Commercial Manager at Workforce Staffing Applications for the UIF/Temporary Employment Services (TES) grant to alleviate employee layoffs has closed. But this was always going to be a temporary measure. The long-term implications of the COVID-19 pandemic on our economy will continue to resonate and be a permanent…

28 Sep 2020
The real reason you should be investing offshore

By: Chris Potgieter, Managing Director of Old Mutual Wealth Private Client Securities Discounting for a moment the state of the…

The real reason you should be investing offshore

By: Chris Potgieter, Managing Director of Old Mutual Wealth Private Client Securities Discounting for a moment the state of the local economy and one’s particular socio-political view, the key motivation for any investor to invest offshore should be to have appropriately diversified wealth in pursuit of real capital growth at…

21 Sep 2020
Women are lagging in retirement savings and are debilitated by stress

In a recent study of their client base, Momentum Corporate revealed that almost half (41%) of the employees on the…

Women are lagging in retirement savings and are debilitated by stress

In a recent study of their client base, Momentum Corporate revealed that almost half (41%) of the employees on the FundsAtWork Umbrella Funds are women. With an almost 50/50 gender split across the client base, a one-size-fits-all approach to advice on employee benefits simply won’t cut it. This is according…

15 Sep 2020
Despite COVID-19, SA investors expect higher future returns

Even as COVID-19 halted the longest economic expansion on record and plunged the world into deep recession, South African investors…

Despite COVID-19, SA investors expect higher future returns

Even as COVID-19 halted the longest economic expansion on record and plunged the world into deep recession, South African investors expect to make an average annual total return of 12.67% – almost 2% higher than the global average predicted returns of 10.9%. This was revealed in the recently released Schroders’…


Top stories


10 Apr 2020
When the going gets tough, farmers are on familiar territory

South African farmers are old hands at adapting to uncertain and daunting circumstances, and our local agricultural industry has proved…

When the going gets tough, farmers are on familiar territory

South African farmers are old hands at adapting to uncertain and daunting circumstances, and our local agricultural industry has proved to be most enterprising in acclimatising to challenges as they arise.

10 Sep 2020
How too much choice is draining your brain

By: Paul Nixon, head of technical marketing and behavioural finance at Momentum Investments From the words of Francis Scott Key…

How too much choice is draining your brain

By: Paul Nixon, head of technical marketing and behavioural finance at Momentum Investments From the words of Francis Scott Key that dubbed America “The land of the free”, which stuck, to the unforgettable Mel Gibson monologue where an army of painted Scots were willing to trade their lives for the…

13 Apr 2020
Investors should keep a reasonable investment allocation outside of SA

MoneyMarketing asked Roland Gräbe, the head of Tailored Fund Portfolios at Old Mutual Wealth, about offshore investments in the COVID-19…

Investors should keep a reasonable investment allocation outside of SA

MoneyMarketing asked Roland Gräbe, the head of Tailored Fund Portfolios at Old Mutual Wealth, about offshore investments in the COVID-19 environment and what form a global market recovery will take.

13 Apr 2020
SA’s Proposed Covid-19 Disaster Management Tax Relief

The National Treasury recently issued the draft Disaster Management Tax Relief Bill (Bill) for public comment by 15 April. The…

SA’s Proposed Covid-19 Disaster Management Tax Relief

The National Treasury recently issued the draft Disaster Management Tax Relief Bill (Bill) for public comment by 15 April. The draft Bill, together with its explanatory memorandum, provides clarity with regards the tax relief measures President Cyril Ramaphosa announced on 23 March.


Visit the official COVID-19 government website to stay informed: sacoronavirus.co.za