Will pensioners get a R5 000 old-age grant? Expert weighs in

Beneficiaries of the old-age grant have become vocal about wanting the grant to increase to R5 000.

But is that a realistic expectation?

We reached out to an expert for a clear answer.

Is a R5 000 Old-Age Grant Possible?

To understand the reality of a grant increase of R2 600, University of Pretoria Professor Heinrich Bohlmann of the Department of Economics weighed in.

Bohlmann explained that “Raising the old-age grant to the R4000 to R5000 range” would “add close to R100 billion per year” to the budget.

The current social grant budget is R292.8 billion.

Such a sharp increase would add to the R430 billion South Africa spends a year servicing debt.

Carefully increasing one line item in the budget would be possible if the country was “growing” at more than 4% a year in “real terms and generating significant job growth.”

Then, pensioners might expect a R5 000 increase.

Unfortunately, pensioners can’t expect such a raise because “GDP per capita [is] lower today than it was in 2007.”

“There is no new money to fund new major expenses”

Bohlmann admitted that a big increase, the kind pensioners want, would only be possible if National Treasury “cut spending somewhere else.”

Where would that be?

“There is no standout area where we can say they are doing so well that they can get by with significantly less money,” Bohlmann said.

However, he gave some suggestions that allow the government to free up cash:

• Get rid of corrupt officials and tenderpreneurs.
• Complete public projects efficiently.
• Institute policies that create good incentives and build investor confidence, increasing jobs.

Until this happens and South Africa has many back-to-back years of real growth, an increase “is extremely unlikely from a Treasury perspective.”

What Can Pensioners Expect in 2027?

At the moment, there aren’t signs that the government will raise the old-age grant to R5 000.

“The simple answer is that raising the old-age grant by more than even 10% seems unlikely,” Bohlmann said.

Instead, he proposed pensioners could expect an increase of “just-more-than-inflation,” roughly 6 to 8%.

However, to pay for this, “other spending categories will” likely be reduced, he concluded.

If Treasury uses an above-inflation model, pensioners can expect a grant increase of between R144 and R192.

But if budgeting continues as it has in the past, pensioners could expect a grant increase of between R100 and R120 in 2027.

Far from the R5 000 pensioners want, or the R4 500 some political figures are promising.