Board Letter to GEPF Members and Pensioner About

31 January 2019 

Dear Members / Pensioners 

As many of you are aware, the Public Investment Corporation Inquiry established by President Mr Cyril Ramaphosa, to probe allegations of impropriety at the Public Investment Corporation (PIC) has begun. 

The Government Employees Pension Fund (GEPF) supports the establishment of the inquiry as we believe it will result in a stronger and more effective Public Investment Corporation. In this regard, the GEPF has written to the PIC Inquiry indicating its willingness to cooperate fully with the inquiry. 

We have also noted with concern the recent suspensions of senior PIC employees as well as the instituting of a forensic investigation by the Board of the PIC into allegations of impropriety against certain directors of the Board. The GEPF views such matters in a very serious light and as such, we have written to the PIC raising our concerns with respect to these matters, including the alleged governance failures at the PIC. 

It is understandable that the revelations at the inquiry and the alleged governance failures are as much a concern to you, our members and pensioners, as it is to us at the GEPF. 

I would like to assure you that the GEPF is in a very sound financial situation and that such issues will not have an impact on your pensions and benefits. Despite the indications of apparent failures and or circumvention of processes with regard to a number of investments, the overall performance of the PIC as an asset manager remains positive and in line with agreed criteria. Nonetheless, the GEPF continues to heighten its monitoring and oversight. The board and management of the GEPF takes its fiduciary duties very seriously and is committed to ensuring that our fund continues to grow. 

Yours sincerely, Abel Sithole Principal Executive Officer GEPF

Read more

Government Employees Pension Fund pensioners will receive..

Government Employees Pension Fund (GEPF) announced today that an annual pension increase of 5.2% to its pensioners with effect from 1 April 2019. 

The GEPF has granted this increase to enable pensioners to keep up with rises in inflation. 

The pension increase is based on the 5.2% inflation rate for the 12 months ending 30 November 2018 released by Statistics South Africa on 12 December 2018 thus making the increase equal to 100% of Consumer Price Index (CPI) and higher than the 75% of Consumer Price Index (CPI) provided in terms of GEP Law and Rules. 

Pensioners whose pensions commenced after 1 April 2018 will receive a proportionate increase based on the number of months they have been in receipt of a pension by 31 March 2019. 

It must be noted that increases such as this increase which is above what is provided for in GEP Law and Rules is granted at the discretion of the Board taking the Fund’s investment performance into account. 

An analysis of the assets held by the Fund in relation to the valuation of its liabilities undertaken in March 2018 showed that the Fund is 108.3% funded, which means that there are sufficient assets in the fund to cover its actuarial liabilities in full. 

This funding level as been achieved despite, amongst others, the: 

• increase in the number of pensioners 

• pension increases 

• increase in resignation pay-outs 

• increase in funeral benefits from R7 500 to R15 000 upon death of a member, pensioner or spouse as well as the funeral benefit increasing from R 3 000 to R 6 000 for eligible children 

• the introduction of the Child Pension which replaced the Orphan’s Pension. 

Benefit improvements over the years together with investment performance, salary and pension increases result in changes in both the minimum and long term funding level. 

Read more

GEPF change rules regarding pension debt on divorce

Following the gazetting of the Government Employees Pension Law Amendment Bill on 23rd May 2019, the Government Employees Pension Fund (GEPF) will, once the amended rules are implemented, no longer subject a member to a debt model in executing a divorce settlement. Instead the new amendment provides for the reduction of pensionable service of the GEPF member that is equal to the value of the divorce settlement amount paid. 

This amendment to the law removes the pension debt that accrued to the GEPF member when a portion of their pension was paid out by the GEPF as a divorce settlement. This pension debt calculation created the perception that members could find themselves owing money to the GEPF when they retired. 

The amendment now ensures that rather than creating a debt, there will be an adjustment to the member’s pensionable service following the payment of a divorce settlement by the GEPF. This means that the benefit that will be paid to the member upon retirement will now be decreased by reducing the members’ years of pensionable service to take into account the pension interest of the member that was given to the spouse upon divorce. 

Therefore, members will receive their full benefit after the reduced pensionable service has been affected. Members who have more than ten years of pensionable service will still be entitled to a lump sum and a monthly pension upon existing the fund, however at a reduced value. Following this law change, the GEPF is currently developing and gazetting rules that will govern the implementation. It is expected that this process will be finalised in July 2019 and the implementation of the new rules will come into effect as of the 01st August 2019. 

Parallel to the process above, the GEPF will be writing to all affected GEPF members in July 2019 to inform them about how these changes are going to affect their pensions and service period and allow them the opportunity to opt from the old divorce debt model into the service reduction model. The affected members will have up until the 22nd May 2020 to indicate their choice of either remaining with the debt and interest model or move to the service adjustment model approach. Currently affected members who fail to indicate their choice by 22 May 2020 will automatically be converted into the new approach. Post 22 May 2020 all members who have a legal divorce claim against their pension will be subjected to the service reduction model. 

Read more
X