ASSETS
Banks the main recipients of tax-free savings
Banks have a huge advantage with extensive client base from which to mine for tax-free accounts, Intellidex says
Banks held the bulk of cash in tax-free savings accounts — 41% of the R5.2bn in these facilities — as at the end of February. Life insurance companies held 26.5% of assets, followed by collective investment schemes (20.9%) and stockbrokers (11.9%), Intellidex said in a report surveying the universe of suppliers of these accounts. Money in these tax-free savings accounts was held mainly in cash (R2.4bn), followed by equity (R2bn), bonds, property and then commodities. "This is causing some consternation in that interest rates are low, so real returns are negligible or even negative," Intellidex said. "Respondents also point out that banks have a huge advantage in that they have an extensive client base from which to mine for tax-free accounts, and they already have those clients’ [Financial Intelligence Centre Act] registrations on hand, making it far easier for them to open new accounts." In an effort to encourage South Africans to save, the Treasury introduced tax-free accounts in ...
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