Real-life figures show SA pensioners losing ground

Pension fund statistics usually focus on assets under management, but payment clearing house BankservAfrica has launched its first private pension index, which tracks actual payments into the bank accounts of South African pensioners.

These statistics provide a snapshot of what the majority of the country's pensioners are living on each month, along with the number of the elderly who claim government grants to supplement their privately made provisions. The figures exclude lump sum payouts.

According to the index, a total of 621523 pension payments were made in December last year, at an average of R5722.

The median pension provides a clearer picture, however: the typical South African pensioner is being paid just R3559 every month. This is despite South Africa having the sixth-highest ratio of pension assets to GDP in the world, measured as of 2012.

On the positive side, the average monthly pension payment is up 8.7% on the year before, with real growth of 2.8%. However, again, the median pensioner saw a rise of just 2%, which shows that the wealthy at the upper end of the scale are distorting the picture.

South African pensioners are, by and large, going backwards.

Part of the problem is that the age group of 60 and above forms an ever-greater proportion of the population - now standing at 4.4 million and growing at 3.2% a year versus the total population growth of 1.4%. Pensioners make up more than 8% of the total population.

Just less than a fifth of this group receives monthly payments from a private pension of some kind - which tend to average more than four times the value of an old-age grant.

Mike Schussler, chief economist at Economists.co.za, attributed this mainly to a performing equity market, which rose 17.8% last year compared with 2013. With interest rates remaining low, equities were the go-to option for those needing returns that would outstrip inflation.

Altogether, 77% of all old-age households receive income of some kind, whether a government grant or private pension.

According to Bankserv-Africa, if the median or typical pensioner were able to gain access to a government grant, their income would increase a significant 38%.

Worryingly, the average pension from 2014 remains just 45% of the average disposable salary, also as measured by BankservAfrica. This means that, even though pensions are growing, pensioners end up having much less to spend than the disposable income they enjoyed at the end of their employment. The index shows 85% of all pensions are below R10000.

According to Schussler, South Africa's pension assets of R2.7-trillion are collectively owned by more than 15 million accounts - although there are almost certainly more accounts than people who hold them.

Roughly 7.2 million employed taxpayers make some form of monthly pension fund contribution payment and 740000 South Africans are drawing a pension.

He estimated stokvels and other saving schemes added 400000 to the overall number of people saving for or getting pensions.