The real average and overall salary paid contracted in January 2021 after coming under strain from the pandemic and level 3 lockdown, according to the latest BankservAfrica Take-home Pay Index (BTPI).

However, South Africa’s real private pensions reached the best level on record in the BankservAfrica Private Pension Index (BPPI).

“The real average salary was R13 030, which represents a -2.4% decline from December 2020 and a -0,2% year-on-year decrease,” says Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements. “This is a sure sign of the pressure that average salaries faced under this period.”

This, however, reflects a return to the usual movements as average salaries in the BTPI typically decline before making a slight comeback in real terms. It could also have to do with the high average salary base from the previous year.

“Still, we can’t ignore the current environment’s influence. As South Africa and the world begins to emerge from the lockdown and pandemic, and vaccinations slowly come to the rescue, one can expect a return of negative months before things hopefully improve,” says Mike Schüssler, chief economist at economists.co.za.

Inflation also played a role in the BTPI. In January 2021, the total take-home pay paid into the combined bank accounts of employees was up by just 0,6% before inflation. However, when taking inflation over the past year into consideration, this declined by -2,5%.

“The economic bounce back has been impressive and most formal sector employees paid via the National Payment System have managed to keep their jobs or were re-employed,” explains Schüssler.

However, one should not get optimistic too soon as the total number of banked take-home pay remains lower than a year ago and before the pandemic. “A number of people are still not back at work, which we believe to be the reason for the -3.2% decline in the monthly equivalent paid between January 2020 and 2021,” says Schüssler.

According to the BTPI, the average salary figures are beginning to normalise, as has been expected a few months back. This return to normal for salaries should continue with a few affected industries expected to experience some shocks in the coming months.

The overall take-home numbers suggest January will be a weak consumer spending month when compared to a year ago. However, the reinstatement of the Covid-TERS payments until the end of March for industries affected by the lockdown may provide some relief in the short term.

But, with the average real take-home pay declining, it will be interesting to see if there will be tax relief for employed South Africans when the National Budget Speech is tabled tomorrow. This is as businesses and households come under even more financial pressure from the planned 16% hike in electricity costs in April.

Private pensions shot up

The total amount paid for all private pensions and the average private pension increased well above the rate of inflation.

“The BankservAfrica Private Pension Index (BPPI) increased by 8,6% year-on-year and in real terms. This is by far also the highest real increase of BPPI we have on record,” says Naidoo.

However, this should be considered against the -4,5% decline in the number of payments made to private pensioners. The fall in numbers was from pensioners receiving less than R12 000 in the bank. Those receiving between R6 000 and R12 000 declined by -3,2%. The number of private pensioners receiving between R2 000 and R6 000 fell by -8,2%. Those banking less than R2000 fell by -10%.

“This probably has to do with rule changes in the pension regulations which makes provision for pensioners with less than R247 000 to withdraw remaining money in their retirement fund. Provident funds and retirement annuities now share the same set of regulations,” explains Schüssler.

As such, pensioners may have combined their provident fund and retirement annuity. This may explain the double digit increase in the number of pensioners receiving over R12 000 in the bank. The number increased by 11,1% from January 2020.

Despite this, the overall total pensions paid increased by 2,2% year-on-year, after inflation. Combined with the overall decline in the number of pensioners, this led to the highest average real private pension increase ever experienced via the BankservAfrica payments system.