Advisers leverage savings changes to expand client engagement
Financial advisers will love Budget 2026 for the opportunities it creates for reaching out to clients, particularly in the savings and investment worlds. In his Budget 2026 presentation, delivered 25 February, Finance Minister Enoch Godongwana raised the cap for contributions to retirement funds from R350 000 to R430 000 per year, and increased annual contributions to Tax Free Savings Account (TFSA) from R36 000 to R46 000.
A balanced, stable budget
Mid- to high-income households that have extra cash available for discretionary savings will welcome these changes, but there were also some pleasant surprises for those who do not earn enough to tuck away R3 800 per month into their TFSAs. Leading financial services brands have welcomed the Budget for creating balance and stability by, for example, holding off on income tax or VAT increases and finally making inflation-linked adjustments to personal income tax brackets.
Edith Jiya, MD, Old Mutual Retail Mass Market, praised the “tangible household and savings incentives” listing positives like higher medical tax credits; higher tax-free investment limits; income tax bracket relief; larger offshore allowance; and the raised retirement investment deduction cap. The full inflation adjustment to personal income tax brackets provides welcome protection of households’ purchasing power. Treasury had left the brackets unchanged in 2025, pushing taxpayers into higher brackets on the back of inflation-adjusted salary hikes.
“Collectively, these changes leave more cash in pockets and improve incentives to save,” she said. Instead of doing away with medical tax credits, the Minister raised them from R364 to R376 for the first two members and from R246 to R254 for additional members. The annual single discretionary allowance for offshore investments was doubled to R2 million.
From a planning perspective, the more consequential Budget 2026 changes are those affecting long-term saving caps. “The strengthened incentives for long-term saving reinforce the importance of disciplined investing,” said Jean Pierre Vermeulen, Wealth Specialist at Momentum Financial Planning. “The higher tax-free investment and retirement deduction limits create meaningful opportunities to build wealth in a tax-efficient way.”
Creating growth, attracting investment
The Banking Association of South Africa (BASA) referred to the 2026 speech as a “good news” Budget that will help increase the positive momentum building in the economy. “The Minister and National Treasury have made the best possible use of a R21.3 billion tax revenue windfall [to provide] South Africans with some tax relief while continuing to invest in economic infrastructure and reducing the cost of the national debt,” they said, in a press release issued shortly after the speech landed.
BASA took a close look at the fiscal outcomes signalled in Budget 2026, noting a steady decrease in gross debt as a percentage of gross domestic product (GDP) and growing primary budget surpluses as net positives for investor confidence. “The tax revenue windfall has given South Africa much needed breathing room to consolidate and progress its economic reforms,” the association said, before calling on government to ensure that the funds allocated to them are administered honestly and spent efficiently to deliver tangible social benefit.
Jiya picked up on the macro narrative too, complimenting Treasury for maintaining fiscal prudence despite higher-than-expected tax revenue. “Higher commodity prices, particularly in precious metals, have flowed through to tax receipts, with corporate income tax and net VAT better than expected,” she said. “In practical terms, this revenue overrun has allowed Treasury to do two things that matter for markets: lower debt servicing costs while avoiding previously mooted tax hikes.”
Debt-to-GDP discipline maintained
Fiscal prudence reduces borrowing pressures and debt servicing costs, freeing up cash for spending on education and healthcare. Vermeulen singled out the improving economic trajectory as one of the positive signs from Budget 2026. “The economy is projected to expand from 1.4% in 2025 to 1.6% in 2026 and gradually reach around 2% by 2028,” he said. “While growth remains modest, the direction is positive and supports a more stable planning environment for investors.”
Lullu Krugel, Chief Economist at PwC, noted that the budget did exactly what markets needed it to do. As proof, the rand strengthened in the run-up to the speech and during it, and the benchmark 2035 government bond yield fell to around 7.9%. The chief economist delved into the GDP growth forecasts shared in the budget, noting that Treasury was slightly more optimistic than PwC. “Lower nominal GDP directly compresses the tax base; every percentage point of growth shortfall translates into materially lower revenue in the outer years,” she said.
Much of the post Budget 2026 commentary was aimed at consumer education, with leading financial services brands calling for fiscal discipline at the household level. John Manyike, Head of Education at Old Mutual felt the Minister had “struck a careful balance between maintaining fiscal discipline and providing targeted relief” for taxpayers. “The decision to withdraw the proposed R20 billion tax increase, introduce bracket creep relief in two years and increase medical aid tax credits all provide direct support to consumers’ disposable income,” he said.
The usual tax hikes
The pro-consumer outcomes being bandied about in the media should not deflect from the cost impacts that Budget 2026 introduces. Manyike said the inflation-linked hikes in so-called sin taxes and the nine cents per litre increase in fuel levies would have an impact on monthly household budgets, calling on individuals to review their personal finances and reassess spending patterns in response. “The opportunity now lies with consumers to respond proactively by reviewing their budgets and making full use of the incentives provided,” he concluded.
There were interesting changes for small, medium and micro enterprises (SMMEs). “The increase in the VAT registration threshold for small business from R1 million to R2.3 million is an important signal that the government is committed to supporting small businesses, but much more needs to be done to reduce their regulatory burden and to make it easier for them to access finance,” BASA wrote. “We will continue to work with the relevant authorities to make it easier for small businesses to meet the requirements to access finance.”
Victor Muphunga, Head of Research at Private Clients at Old Mutual, commended the Minister “for taking bold steps to encourage the growth of small businesses, particularly through the announcement of the increase in the compulsory VAT registration threshold.” He said that a supportive environment for SMMEs was good for consumers. “These measures will further enhance and reinforce the recovery already being driven by consumers, while creating sustainable opportunities for employment and long-term growth,” he said.
Financial literacy plus professional advice
Financial outcomes are increasingly shaped by individual decisions. Miranda Luttig, Wealth Specialist at Momentum Financial Planning said that financial literacy and personalised advice were “more valuable than ever” in helping consumers balance the cost pressures and savings pressures introduced by the latest budget.
“A financial plan cannot be one-size-fits-all,” she said. “A qualified adviser helps translate policy changes into practical actions that make sense within a client’s real-life circumstances.” Financial advisers were encouraged to reach out to their clients to explain how policy changes affected their personal finances. At a practical level, you may wish to approach clients to increase their monthly contributions to retirement funds and TFSAs or rethink how much cash they should move offshore in the coming tax year.
“When individuals understand how Budget measures apply to them personally, they are far more likely to make confident, disciplined choices that strengthen long-term resilience,” Grobler concluded. She said that financial plans should be flexible and responsive, and encouraged advisers and clients to revisit their financial plan before making major decisions, and to always ensure that it aligns with the latest policy environment.”
Writer’s thoughts:
Budget 2026 may offer limited headline relief for households, but it gives advisers fresh incentives to turn policy changes into meaningful client engagement. Are you using the expanded retirement fund and TFSA allowances to start new planning conversations? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
