South Africans’ take-home pay for February, as measured by BankservAfrica, increased by 0,5% in real terms on a year-on-year basis, a change from the 1,1% experienced in January.
Twelve of the last 13 months have seen take-home pay increases beat inflation albeit at a much lower rate than the increases for private pensions.
Take-home salaries averaged R14 502 in February 2018. The effective personal income tax increases over the last year were lower than expected.
Salaries that were adjusted in line with inflation most likely resulted in “bracket creep” into higher personal income tax brackets. Therefore, while employees’ earnings seemed to improve with salary increases, in real terms the movement into higher tax brackets resulted in a more muted growth in take-home pay.
Average private pensions grew by 11.5% on average in February 2018 compared to February 2017. This represents the fastest nominal growth since November 2013. In nominal terms, the average private pension was R7 029 in February 2018.
After taking inflation into account the increase was 6,8% – the highest year-on-year increase BankservAfrica has on record in real terms. Considering that the actual inflation rate was only 4% in February, this means that average pensions grew at more than two and a half times the rate of inflation.
The typical pension also increased rapidly by 6% in real terms on a year-on-year basis in February 2018. The person in the middle of the pension income distribution receives just over 68% of the average pension.
Despite the rapid changes to pensions over the past year, pension growth remains below half the level of take-home pay as measured by BankservAfrica. The average pension paid is now 48,9% of the average take-home salary.