Wealth Debrief Exchange: Is a Retirement Annuity Best for Surplus Contributions?

Investors have two weeks left to top up their Retirement annuities before the tax year-end. 

For years, topping up retirement funds before tax year-end has been standard practice. The tax benefits are clear, but is it always the right move? 

In this edition of the Wealth Debrief Exchange, Old Mutual’s David Veary and Tiaan Herselman explore: 

• Tax efficiency across different investment vehicles 

• How liquidity and post-retirement tax impact outcomes 

• Why retirement annuities often suit younger clients 

• When endowments benefit high-income earners. 

There is no “one-size-fits-all” solution — the real value lies in challenging assumptions and tailoring strategies to each client’s unique reality.  

To view their fairly short, concise and insightful recorded session, you can click on this link below;

Old Mutual International (OMI) is introducing Monthly Investments   

Looking at direct offshore investments, in a recent innovation, the Old Mutual International Investment Portfolio+ in the Isle of Man now supports recurring contributions, debited monthly in rands, and invested offshore in USD, EUR, GBP, CHF, or AUD, with access to one of the widest selections of international funds. 

Previously, the product structure was only available via lump-sum investments - this further introduction means the same offshore exposure, greater certainty when contributing regularly, and more choice where it matters. 

In this episode of the Wealth Debrief Exchange, Tiaan Herselman speaks to Trevor John, Head of Distribution at Old Mutual International (OMI), about investing monthly, where the minimum monthly contributions are R10 000 per month, with a maximum of R83 000 per month (i.e., keeping this below the R1million per annum discretionary offshore allowance).

If you want to know more, please feel free to contact me. 

Today, Old Mutual International remains the largest offshore platform available via SA product providers. From simplifying tax and admin to offering open-architecture investment choices, Old Mutual International in the Isle of Man provides a platform designed for growth, succession, and diversification. 

This is all to help our clients structure offshore investments for long-term success - backed by a trusted name and competitive, streamlined fees. 

The link below is a previous quality short 9-minute summary explaining the benefits of the OMI structure in the Isle of Man. 

It’s a good reminder to confirm the benefits for our existing investors, as well as for any persons looking for an offshore investment platform.

Hywel George on the Singularity  

The Old Mutual Investment Group’s Director of Investments, Hywel George, discusses the impact of AI on our working and daily lives. 

The Singularity is almost upon us, and 2026 will be a truly momentous year for us all.

After providing the background, from minute 13, he explains that, in only a few years, we can even expect to live much longer with age-intervention therapy, making us all younger.  

To view this webinar where AI and robotics meet and possibly surpass us humans, click on this link below;

Even though everything around us is changing at a rapid pace, just remember that Jesus is the same yesterday, today and forever.

Bracket creep: The Silent Tax | Allan Gray

Next week, we see our National Budget speech, where each year we listen with bated breath to the Minister of Finance’s annual Budget speech to learn whether tax rates will increase and breathe a sigh of relief when no noticeable tax hikes are announced. But beyond the Budget headlines lurks a silent tax. 

Ahead of the 2026 Budget, Allan Gray’s Carla Rossouw brings bracket creep into focus, helping us to prepare for what may come.

In recent years, low economic growth has made spending cuts and legislated tax increases unfeasible. Instead, the Minister of Finance has opted to raise additional revenue by making little to no adjustments to the personal income tax brackets, leading to what is termed “bracket creep”. 

Bracket creep is a deliberate yet simple measure for the National Treasury to collect more revenue in a way that is uncontested and largely unnoticed by most taxpayers. 

Stagnant tax tables may appear to be a reason to celebrate, but in fact have an impact on the average South African taxpayer’s take-home pay – especially when this persists over several years. While bracket creep is not new, the compounding effect over several years is significant.

Understanding bracket creep

Salaried taxpayers expect to move into a higher tax bracket when they are promoted and, as a result, receive a notable salary increase and/or performance bonus. However, for many, the shift into a higher tax bracket may be incidental.

Salaries are often designed to keep up with inflation so that purchasing power (the goods and services you can afford with a given amount of income) remains the same over time. But if your salary increases as a result of an annual inflationary adjustment and there is no change in the tax brackets, you may be pushed into the next tax bracket and come out poorer. 

This is because a greater portion of your increase will be swallowed by tax. The result is that your salary increase does not translate into a genuine uplift in your purchasing power, as shown in the example below.

Although Mr X’s income increased by 5%, his after-tax income only increased by 4.05%. This equates to a monthly reduction in purchasing power of around R335 compared to what he could have received had the tax brackets been adjusted.  

When tax rebates (amounts that reduce an individual taxpayer's overall tax liability) are not adjusted for inflation, this could result in a double whammy.

Graph 1 illustrates the monthly reduction in purchasing power (y-axis) as determined by your tax bracket (x-axis).

Impact on the vulnerable 

South Africa has a progressive tax system, meaning that your tax rate increases as your taxable income or wealth increases. The system is premised on the “ability-to-pay” principle, i.e. those with greater resources should contribute more to public services and infrastructure. However, the unfortunate reality is that the most profound impact of bracket creep is experienced by 1) low- to middle-income taxpayers given that they are more likely to be pushed into a higher tax bracket, and 2) those who previously earned just under the tax threshold (the amount above which you become liable to pay income tax) and have never paid Pay As You Earn (PAYE).

Bracket creep not only raises revenue from existing taxpayers but also widens the tax net, with more people shifted over the monetary threshold when PAYE becomes due and payable.

While the 2025 Medium-Term Budget Policy Statement presented a better fiscal outlook (due to higher tax revenue, reduced spending in certain areas and lower debt-servicing costs), gross revenue is projected to fall short of 2025 Budget estimates by R15.7bn in 2026/2027 and 2027/2028. 

To make up for this shortfall, for the third consecutive year, it is projected that individual income tax tables may not be adjusted, placing greater pressure on households. 

The projected additional revenue collection from bracket creep is significant: R16.4bn for the 2026/2027 tax year and R17.5bn for 2027/2028, as shown in Table 1.

How to ease the impact of bracket creep

In the absence of a systemic solution, such as annual indexation – a process of automatically adjusting tax brackets to account for the annual rise in the cost of living – there are practical steps that one can take to lessen the impact of bracket creep:

It is important not to let unexpected tax increases impact your financial goals. 

Similarly, PWC share similar insights that you can read more about by clicking on this link:  The invisible way the government takes more money from South Africans every year – Daily Investor

Let’s all keep an eye on this when next week’s Budget Speech is presented. 

Ninety One Portfolio Manager Malcolm Charles Discusses Inflation and the South African National Budget

In a recent Business Talk, Malcolm Charles, Portfolio Manager at Ninety One, discusses South Africa’s market rebound and the outlook for rate cuts. 

Malcolm is responsible for a range of fixed-income portfolios, including the Flexible Bond, Dynamic Bond, and Diversified Income strategies, as well as the Fixed Income hedge fund.

Before joining Ninety One, he worked at other prominent companies, including African Harvest Fund Managers and Old Mutual Asset Managers.

In this Business Talk interview, Malcolm explains how much South Africa’s market has changed since early 2024, and unpacks what is driving the strengthening of the Rand.

He notes what South Africans can expect from the Reserve Bank over the next 12 to 18 months, as well as highlighting potential positive surprises in South Africa’s National Budget.

Malcolm then reveals why he describes the current global backdrop as ‘Goldilocks’ and what this means for investors.

He concludes the interview by sharing his advice for South African investors and why he punts a “stay calm and carry on yielding” strategy in the current environment.

You can view this interview by clicking on this link:

FRIDAY FOOD FOR THOUGHT