Banele Ginindza
THE MAJORITY of South African pensioners need the government old-age grant to survive because formal-sector workers are seeing a major fall in income when they retire if they are solely reliant on a private pension.
“The grim reality is that most pensioners are in a struggle to maintain their lifestyles, and most will struggle to make ends meet unless they access some form of an old-age grant,” said Caroline Belrose, the head of fraud and data analytics at BankservAfrica.
Both the percentage increases in pensions and their actual level lagged behind figures for disposable salaries from the formal sector, Bankserv said yesterday at the launch of the country’s first pension index.
Bankserv, which touts itself as Africa’s largest automated clearing house, said the newly launched BankservAfrica Private Pension index (BPPI) provided an income gauge of monthly private pension payments into accounts of those above 60-years-old.
“Despite having the sixth-highest pension assets to GDP (gross domestic product) ratio in the world in 2012, very little is currently known about how much South African private pensioners get paid in monthly income,” she said of reasons behind establishing the index.
It said the average pension for last year was less than 45 percent of the average BankservAfrica disposable salary index.
It said from this, it was clear that despite fast increases in pensions, more than 85 percent of all pensions were below R10 000, which was less than the average disposable salary also measured by BankservAfrica using similar methodology.
Although the majority of people over 60 years of age receive government grants, Bankserv said that by value the largest amount of income in this group would be from private pensions.
According to Bankserv, there were 621 523 pension payments in December, slightly fewer than the previous month and in October.
The latest BPPI for December stands at R5 722 on average, making this the fourteenth month where the “take-home pension” has been over R5 000 per month.
However, the median pension revealed that the typical pensioner only earned R3 559 per month, while 53.3 percent earned less than R4 000 per month, Bankserv said.
The December 2014 average pension payment was 8.7 percent higher than December 2013, which means that on average pensioners receiving a private pension saw real income growth of 2.8 percent for the year to December 2014.
For the year as a whole, the average increase in the BPPI was 8 percent – nearly 2 percent higher than the average consumer inflation for 2014.
Almost every month in 2014 saw pension payments rise above the inflation rate, with the exception of February 2014.
According to Mike Schüssler, the chief economist at Economists.co.za, this was most likely the result of a fast-rising equity market which rose 17.8 percent over the year of 2014 compared to the year of 2013.