Tax-free savings accounts: a decade of growth and opportunity

24 February 2025 Standard Bank

Data from Standard Bank shows a substantial increase in the adoption of and value invested in Tax-Free Savings Accounts (TFSAs) over the past decade.

Launched by the South African Treasury in March 2015, TFSAs offer tax-free growth on interest, dividends, and capital gains, providing a unique opportunity for individuals – especially low-income earners – to save at an accelerated rate.

Thopi Mhloli, Head of Savings & Investments at Standard Bank, recalls the excitement surrounding the launch, with notable investments in Tax-Free Call Investment Accounts and record-high opening balances in 2015. This initial enthusiasm led to a compound annual growth rate (CAGR) of 40% in new accounts and 45% in customer balances between 2015 and 2024.

Although opening balances dipped slightly after 2015, sales volumes continued to grow, peaking in 2018. The opening of new TFSA accounts began declining in 2019, but investment activity picked up again in 2024, particularly among senior citizens.

Usage Trends and Demographics
Monthly data reveals seasonal trends, with TFSA investments peaking in February and slowing in November and December. Consumers earning over R20,000 per month (23%) and individuals aged 55 and older form the largest groups of TFSA holders.

Mhloli emphasizes the importance of strategic contributions around the tax year-end to maximize benefits. TFSAs are ideal for long-term goals such as retirement or funding a child’s education, with an annual contribution limit of R36,000.

Encouraging Financial Resilience
Mhloli encourages South Africans to take advantage of TFSAs, a government initiative aimed at improving the national savings rate. Standard Bank offers a Tax-Free Call Investment Account starting at R250, available online, via the banking app, or in-branch. With tax-free interest and immediate access to funds, this account is accessible to all income groups.

“For anyone looking to build financial resilience or grow wealth over time, TFSAs remain one of the most effective investment vehicles available,” adds Mhloli.