New Invisible Tax Quietly Shrinking SA Retirees’ Foreign Pensions
- Currency experts at Future Forex flagged a silent cost that could be quietly reducing what South African retirees receive from overseas pensions
- A pension worth R47,000 at mid-market rates can shrink to R45,900 due to hidden bank spreads, adding up to R13,000 in losses every year
- Future Forex outlined steps retirees can take to check whether their bank is costing them more than they realise
PAY ATTENTION: Mark Briefly News as a preferred source, and our content will appear higher in your Google feed!
Source: Getty Images
South African retirees drawing pensions from abroad may be receiving less than they think. Currency specialists at Future Forex have raised the alarm over hidden conversion costs embedded in traditional bank exchange rates, warning that these silent deductions could be draining thousands of rands from pension payments every year.
The issue centres on what is known in the foreign exchange industry as a "spread." Rather than charging a visible transfer fee, many banks build their profit margin directly into the conversion rate they offer clients. The result is a payout that falls short of the actual mid-market rate without any obvious explanation on a bank statement.
How much are retirees actually losing?
According to a report by BusinessTech, the numbers add up quickly. A pension payment that should be worth R47,000 at the live mid-market rate could arrive as R45,900 once a wide bank spread is applied. That gap of roughly R1,100 per month translates to more than R13,000 a year. Stretched across a retirement of 10 to 20 years, the compounding loss runs into tens of thousands of rands.
PAY ATTENTION: You can now search for all your favourite news and topics on Briefly News.
World Bank data cited by Future Forex puts the average cost of sending money through traditional banks at 14.55%, making it the most expensive transfer channel globally. The global average across all provider types sits at 6.49%, while Sub-Saharan Africa carries the highest receiving costs of any region worldwide, averaging 8.78%.
What pensioners can do right now?
Future Forex advises retirees to start by auditing their own statements. Dividing the total rand amount received by the foreign currency amount sent reveals the exact rate applied, which can then be compared against the mid-market rate on the same day.
Beyond that, the firm encourages pensioners to approach foreign exchange the same way they would shop for car insurance or medical aid, comparing specialist forex providers against commercial banks rather than defaulting to the institution they already bank with.
Transparency is also key. Retirees are urged to ask transfer providers to display the live mid-market rate alongside whatever conversion rate they quote, making any embedded spread immediately visible.
Source: Getty Images
More on SA pensioners
- Briefly News recently reported on a Johannesburg speaker's viral comparison between SA's pensioner grant and the billions spent housing foreign national prisoners.
- Thousands of elderly Joburg homeowners are set to keep a valuable rates rebate without lifting a finger or submitting any new paperwork.
- Briefly News also covered emotional scenes as pensioners protested outside a SASSA office, demanding their monthly grant be raised to a livable amount.
PAY ATTENTION: Stay informed and follow us on Google News!
Source: Briefly News
