In my 42 years in the financial services industry, I have often witnessed legislative injustices inflicted on investors. In July 2015, I wrote an article titled “Fiddling while Rome burns.” (Read the Blog) My argument was simple: while the government was "punting" the then-new Tax-Free Savings Account (TFSA) with its modest monthly limits, it was penalising a massive, over-taxed industry that was doing the real heavy lifting for South African savers.
Twelve years later, the fire in "Rome" is still raging, and the government is still fiddling. Looking at the latest investment data for December 2025 from the Association for Savings and Investment South Africa (ASISA), we see a worrying trend. At the start of 2025, there were roughly 2.45 million individual monthly endowments in force. By the end of the year, that number had dropped to 2.36 million.
In just twelve months, over 88,000 policies were ‘lost’. While the total money being saved is still growing, the number of people saving appears to be thinning out. The "juggernaut" of middle-class savings—the very capital that underpins our investment industry—is under immense pressure.
The reason for this decline isn't just the cost of living; it’s a fundamental tax injustice. Most people save for their children’s education, a new car, or a rainy day using a monthly paid endowment. These plans are taxed at a flat internal rate of 30%. To see why this is a problem, we must look at the 2027 tax scales. In South Africa today, a taxpayer only reaches an average tax rate of 30% once they earn approximately R1.3 million per year.
Now, let’s look at the average endowment investor. According to the December 2025 data, the average monthly premium is just R663. The question is: Does someone saving R663 a month earn R1.3 million a year? Almost certainly not. The standard guideline is that one should save about 20% of one’s salary; it is highly unlikely that these endowments are owned by million-rand-per-year investors.
The average saver is likely a middle-income earner who should be taxed at between 18% and 26%. Yet, by using an endowment, they are effectively volunteering a 30% tax rate. They are being penalized for the very savings discipline the state claims to be encouraging.
Since 2015, the state’s response has been to "fiddle" with minor adjustments. The Tax-Free Savings Account has a lifetime limit of R500,000 that hasn't changed in a decade. Inflation has obliterated its real-world value. Meanwhile, the new "Two-Pot" system focuses on letting people withdraw retirement money early, rather than fixing the tax structures that make saving it so expensive.
In 2015, I warned that we were using the wrong tools to mobilize the nation’s savings. In 2027, the math proves it. If you earn a middle-class salary but save in an endowment, you are donating a huge chunk of your growth to the taxman unnecessarily. It is time to stop the fiddling. We don't need more complex withdrawal systems; we need a fair tax rate for the millions trying to build a future, one R663 contribution at a time.