South Africans grew their wealth at a far faster rate than their incomes in 2025. Household assets less household debt was 15% larger than before, up a tidy R3.2-trillion. Household incomes grew at a more pedestrian rate of 4.7%, or by R230bn.
Household spending on consumption goods was 5.7% up on a year before, a respectable real increase given consumer goods inflation of only 2.2% in 2025, according to the deflator, so helping the economy along. Nominal GDP grew 3.9% in 2025 when measured in money of the day, which lost only 2.8% of its purchasing power when measured by the GDP deflator, meaning real growth of only 1%.
Regarding the increase in net wealth as income and adding it to the disposable incomes of households, the increase in household income ― including unrealised capital gains ― was almost an imposing R3.5-trillion, more than 10 times the increase in disposable incomes last year. The household wealth-to-disposable income ratio in 2025 was nearly five times ― close to the long-term ratio.
The largest contribution to this impressive increase in the wealth of South African households was the increase in the value of the assets held for retirement funds. The claims of households on the pension and retirement funds managed for them amounted to more than R9-trillion in 2025, having added as much as R1.36-trillion to net wealth in 2025.
Pension fund rights account for about 40% of the net wealth of households, and homes about 35%, worth about R7.7-trillion in 2025. The value of pension rights closely follows the JSE all share index and 2025 was a banner year for the JSE, buoyed as it was by dramatic increases in the prices of precious metals, which play a significant role in South African exports and income tax. The JSE returned about 30% in 2025.
The formally employed in South Africa are mostly required to contribute a proportion of their incomes to retirement and medical aid funds. Their employers often add a contribution, which should be understood as a salary sacrifice, not as charity. The share market has served the many employees who are owners of companies well over many years. The shareholders of South African companies, through their pension rights, are many and highly diverse, representative of the workforce. They incorrectly do not register as BEE qualifying.
Clearly changes in household incomes that include capital gains are not only far larger than disposable incomes but are also far more variable, given exposure to financial market forces. Moreover, retirement funds are less immediately accessible than income from work, or from dividends or interest income that compounds most usefully when reinvested in retirement funds, rather than when paid out and consumed.
Banks will lend when secured by incomes. They are far more reluctant to regard pension fund assets as security for their credit. Is it appropriate to encourage saving up rather than down by households, many of which live from pay cheque to pay cheque and incur expensive debt doing so? Cheaper credit would be valuable to them.
Households are increasingly drawing down their funds to cash in their pension fund gains, in as far as they are allowed to by the two-pot system. Even so, given the growth in the market value of pension fund assets, the amounts drawn down to fund expenditure have not had a significant negative effect on the funds managed. Favourable wealth effects will have helped to stimulate household spending in South Africa in 2025 and compensated for a general reluctance or inability to commit funds to capital expenditure, for want of business confidence and the capacity of state-owned entities to do so.
Despite the ubiquity of pension funds for the formally employed, the distribution of South Africa’s wealth has surely been less equal than the distribution of incomes. Especially given that so many South Africans earn or report no incomes at all and rely on taxpayers to fund their consumption of private and public goods, so reducing differences in actual consumption, if not in earned incomes.
However, an inevitably unequal distribution of wealth and of the savings of net income, including capital gains, undertaken mostly by the better off, has a major upside. It means more capital for the economy to fund productive real capital, plant and equipment, infrastructure and research & development.
The higher the ratio of capital ― that is wealth ― to the labour force, the higher will be incomes from work. The rich make their contribution not only by producing and earning more (when earned in the old-fashioned, honest way, not corruptly) but also by saving more to help fund capex.
Expenditure on consuming goods and services by both the rich and poor has an opportunity cost. It means fewer goods and services left over to be consumed by others in the wider community. But saving, accumulating wealth and not spending it all, postponing spending, provides a public benefit. It enables and funds growth in the real stock of capital. It should be encouraged. As should the incentives to allocate capital domestically rather than abroad.
• Kantor is head of the research institute at Investec Wealth & Investment. He writes in his personal capacity.
• Leading business news as it happens: Join Business Day’s WhatsApp channel
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.