admin
South Africa’s largely consumer-driven economy is likely to get a financial stimulus from two-pot withdrawals, as the new pension system takes effect from September. However, it all depends on how much is withdrawn.
Big banks, asset managers and economists are expecting withdrawals from the ‘savings pot’ of pensions totalling between R50 billion and R100 billion in the first year, which many agree could provide another tonic to economic growth.
This is in addition to expected decreases in interest rates, optimism around the economy growing faster on the back of the establishment of the government of national unity (GNU), and Eskom finally getting a handle on load shedding.
Depending on how efficiently the withdrawal process is handled, it is not just the South African Revenue Service (Sars) that’s going to cash in from two-pot withdrawals.
Economists expect consumer spending to jump in the last quarter of 2024, as South Africans making withdrawals are likely to spend more at retail stores, on travel and even big-ticket purchases like cars and deposits on new homes, and hopefully also paying down debt they may have.
Speaking at a media roundtable event on Wednesday, Absa Corporate and Investment Banking’s senior economist Miyelani Maluleke said the bank is forecasting R44 billion in early withdrawals linked to the two-pot system from September to the end of this year, and another R34 billion by August 2025 (marking the first full year of the new pension system).
This totals R78 billion in the first year.
Maluleke expects the taxman (Sars) to get between R8 billion and R10 billion in taxes from the estimated R44 billion in withdrawals in the first four months of the new system (September to December 2024).
He said the big question is, “What consumers are going to do with that money?”
Maluleke noted that while some money withdrawn could go towards paying off debt, he expects the withdrawals to “kick-off spending in the fourth quarter of the year”.– Moneyweb
Online Reporter