THE GOVERNMENT EMPLOYEES PENSION FUND PENSIONERS WILL RECEIVE A 5.5% ANNUAL PENSION INCREASE AS OF 1 APRIL 2022

PRETORIA, 07 MARCH 2022

The Government Employees Pension Fund (GEPF) announced that an annual pension increase of 5.5% will be granted to its pensioners as at 1 April 2022.

This pension increase is based on the 5.5% inflation rate for the 12 months ending 30 November 2021 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 who retired on or before 1 April 2021 are to receive the full increase of 5.5 % as of 1 April 2022. Pensioners who retired after 1 April 2021 are to receive a proportionate increase based on the number of the months they have been in receipt of pension by 31 March 2022.

The GEPF has granted this increase to enable pensioners to keep up with rises in inflation. These increases are based on the affordability of the Fund at the given time. An affordable increase is one that can be granted without placing a strain on the sustainability of the Fund including current needs and future financial health of the Fund in order to continue paying benefits that are promised to our members.

When setting the pension increase, we consider:

  • the investment returns earned over the year,
  • the level of inflation over the same period,
  • how both relate to the assumptions adopted in the statutory valuations and more importantly,
  • how the increase will impact the financial position of the Fund.

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

Pensioners will receive individual letters illustrating the new values of their pensions as of 1 April 2022

Note to Editors

GEPF is governed by the Government Employees Pension (GEP) Law of 1996, as amended, and the rules that accompany it. These rules, along with GEPF’s Pension Increase and Funding Level policies, give firm guidelines on how the Fund must decide the annual increase that is paid to pensioners.

These documents state that GEPF’s Board of Trustees may approve a pension increase after consideration was given to the financial conditions of the Fund and the effect of the proposed increases on the Fund.

This minimum funding level states that the Fund’s assets must be able to cover at least 90% of its liabilities. This means that what the Fund owns (its assets) must be able to cover the cost of at least 90% of what it owes in terms of the current and future pension payments that it is committed to pay (its liabilities). According to the rules, the Fund may thus only approve an increase that it can afford.

For more information, please contact:

Matau Molapo,

GEPF Stakeholder Management and Communications Division

T: +27 (0) 12 424 7315

M: +27 (0)79 1910 757

E: Matau.molapo@gepf.co.za

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GEPF investment portfolio registers a 27.5% growth and a market value of R2.09 trillion

09 November 2021, Pretoria

The Government Employees Pension Fund (GEPF) is pleased to announce its financial results for the year ended 31 March 2021.

Key Performance Indicators:

  • Market value of R2.09 trillion increasing by R451 billion from the previous financial year
  • The Fund reached the significant milestone of R2 trillion in its 25th year anniversary of its founding
  • Investment market value increased by 27.5%
  • Return on Investment of 23.1%
  • Accumulated funds and reserves grew at an average annual rate of 8.90% for the 10 year period 2012-2021
  • Net investment income of R 483.8 billion following benefit payments of R 110.6 billion
  • Member contributions of R82 billion

Despite the turbulent and unpredictable market conditions during the financial year, the GEPF recorded a market value of R2.09 trillion at the close of its financial year on 31 March 2021. This was an increase of 27.5% resulting in a return on investment of 23.1%. Over the 10-year period, 2012-2021, the GEPF’s accumulated funds and reserves grew at an average annual rate of 8.90%.

The growth in the value of assets under management (AuM) confirms that the GEPF’s investment strategy aimed at achieving long-term growth is successfully contributing to the financial soundness of the Fund.

This positive performance is as a result of a recovery of R451 billion in the Fund’s market value following a decline of 11.4 % (R260 billion) in the previous financial year where the Fund’s market value was R1.6 trillion.

The increase in the investment value is mainly attributable to the recovery in financial markets, particularly equities and bonds, from the market contraction in the first quarter of 2020. The Fund’s performance however was negatively impacted by its unlisted and property portfolios declining which bore the brunt of market conditions as a result of the impact of the Covid-19 pandemic on the economy.

In this regard, impairment provisions had to be made to reflect the business reality of an asset at a particular point in time. As a result, the GEPF implemented a very conservative valuation of its unlisted and property assets. Such a valuation approach was done fully aware that improved market conditions could see assets subsequently recover or even exceed the value of the original investment.

We have seen a reversal of R2.1 billion in some of our assets impaired in previous years. A further encouraging sign has been the decrease in the value of impairments from R11.9 billion as at 31 March 2020 to R7.4 billion at 31 March 2021.

Despite the tough Covid-19 operating environment, the total benefits paid by the Fund amounted to R 110.6 billion. Our pension administrator, the GPAA received 27 960 pension claims in 2020/21 compared with 34 134 in 2019/20, reflecting a decrease of 18% in claims. The retirement claims amounted to R76 billion compared to R69,1 billion in the previous year. The Fund’s active members decreased from 1 269 161 in 2019/20 to 1 265 406 in 2020/21. The number of pensioners in the Fund also declined from 313 173 in 2019/20 to 312 647 in 2020/21.

In an effort to enhance and strengthen our oversight and monitoring of the Government Pensions Administration Agency (GPAA) and the Public Investment Corporation (PIC), the GEPF has taken several steps during the financial year. These include:

  • A comprehensive review of the Fund’s investment policy, investment mandate and management agreements with the PIC. These include a more stringent consequence management, a review of the fee models and improved investment and reporting guidelines.
  • A review of the Fund’s operating model and quality of service provided by the GPAA. This review includes the benchmarking of administrative systems to meet the needs of the GEPF and its clients.

The GEPF continues to remain optimistic of the future growth of the Fund and we will continue to play our part in growing the South African economy.

/Ends

The Audited Financial statement can be reviewed on the GEPF website on www.gepf.co.za

Issued by Government Employees Pension Fund

For more information please contact:

Matau Molapo, Communications

T: +27 (0) 12 424 7315

M: +27 (0)79 1910 757

E: Matau.molapo@gepf.co.za

 

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GEPF welcomes the appointment of the new PIC Board

05 November 2021

The Government Employees Pension Fund welcomes the appointment of the new Public Investment Corporation (PIC) Board announced by Cabinet.

The GEPF chairperson, Dr Renosi Mokate, on behalf of the GEPF Board of Trustees and its Executive Committee congratulates the new Board on their appointment.

The GEPF wishes to thank the outgoing Board for its efforts in laying a foundation to strengthen the governance and reputation of the PIC, and is committed to working with the newly appointed Board in the continuation of this work.

The PIC‘s growth and integrity are crucial in the protection of the retirement benefits of GEPF members, pensioners and beneficiaries.

/Ends

For more information please contact:

Matau Molapo, Communications

T: +27 (0) 12 424 7315

M: +27 (0)79 1910 757

E: Matau.molapo@gepf.co.za

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GEPF mourns the passsing of Substitute Trustee, Mr. Terence Chauke

Date: 15 September 2021

The Government Employees Pension Fund (GEPF) is shocked and saddened by the passing of board member and employer-nominated subtitute trustee, Mr. Terence Chauke on 12 September 2021.

Mr. Chauke served as an employer – nominated substitute trustee on the GEPF Board. He was also a member of various committees including the Finance & Audit Committee, Investment Committee, Valuations Sub-committee as well as the Social & Ethics Sub-committee.

GEPF Chairperson of the Board, Dr Renosi Mokate, on behalf of the Board and staff members passes her deepest condolences to the Chauke family, their colleagues and friends.

The GEPF acknowledges the dedication, diligence and professionalism with which Mr. Chauke served the Fund. The Fund will forever be grateful for his tireless contribution and dedication to its members, pensioners and beneficiaries.

May his soul Rest in Peace.

Issued by: Government Employees Pension Fund

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GEPF pensioners will receive a 3.2% annual pension increase as of 1 April 2021

Date: 15 March 2021

Pretoria – Government Employees Pension Fund (GEPF) announced today that an annual pension increase of 3.2% is to be provided to its pensioners with effect from 1 April 2021.

This pension increase is based on the 3.2% inflation rate for the 12 months ending 30 November 2020, in line with policy and past practice, thus making the increase equal to 100% of Consumer Price Index (CPI) and higher than the 75% of CPI provided in terms of GEP Law and Rules.

Pensioners who retired on or before 1 April 2020 will receive the full 3,2% increase as of 1 April 2021, while pensioners who retired after 1 April 2020 will have their pensions increased proportionally for each month of retirement between the date of retirement and 31 March 2021, with effect from 1 April 2021.

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

END/

Note to Editors

GEPF is governed by the Government Employees Pension (GEP) Law of 1996, as amended, and the rules that accompany it. These rules, along with GEPF’s Pension Increase and Funding Level policies, give firm guidelines on how the Fund must decide the annual increase that is paid to pensioners. These documents state that GEPF’s Board of Trustees may approve a pension increase after consideration was given to the financial conditions of the Fund and the effect of the proposed increases on the Fund.

This minimum funding level states that the Fund’s assets must be able to cover at least 90% of its liabilities. This means that what the Fund owns (its assets) must be able to cover the cost of at least 90% of what it owes in terms of the current and future pension payments that it is committed to pay (its liabilities). According to the rules, the Fund may thus only approve an increase that it can afford.

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GEPF ANNUAL RESULTS AS AT FINANCIAL YEAR-END MARCH 2020

GEPF NAVIGATES STRONG HEADWINDS

Monday, 16 November 2020, Pretoria

Main Points

  • GEPF asset market value declined by 11.4% from R1.8 trillion in 2019 to R1.64 trillion in 2020. This decrease in the investment value is mainly attributable to the losses incurred in March 2020 as a result of the impact of Covid-19, the downgrade in credit ratings and a persisting low growth environment.

  • Income received during the financial year included:

    Dividend income – R34.1 billion

     Interest income – R52.3 billion

     Property income – R1.8 billion

     Contributions received – R 80,2 billion

  • Benefits paid upon member’s resignation, retirement, or death was R111 billion which was an increase of R 8.4 billion against 2018/19 financial year payments. This was mainly due to an increase in pension payments which accounted for 62% of the total benefits paid which was driven by the 5.2% monthly increase granted to pensions and a 3.1% increase in the number of pensioners.

As at 31 March 2020, the end of the financial year 2019/2020, the Government Employees Pension Fund, Africa’s largest pension fund reported a decline in its investment portfolio of R243 billion largely impacted by the turmoil in the South African and global economy in the last quarter of the 2019/2020 financial year.

However, due to the resilience of the GEPF investment strategy, the Fund has recovered the losses incurred and its unaudited value is currently R1.9 trillion. This recouping of losses clearly indicates that the GEPF remains financially sound despite the tough economic conditions that the Fund operated in, in the 2019/2020 financial year.

The financial results however continue to highlight that the performance of the Fund is not isolated from the country’s economic and development constraints. The poor state of the South African economy had a significant impact on the Fund, as the economic climate in the three months leading to 31 March was extremely turbulent and coincided with the end of the Funds 2019/2020 financial year.

Much of the decline in the Funds market value was due to the performance of local equities, capital markets and listed property. The decline in international asset classes was offset by a significant decline in the value of the rand against the dollar. The value of the assets reflects depressed market values as at 31 March 2020.

In the context of a uniquely challenging economic environment, the GEPF did sustain an acceptable overall investment performance with income of R168, 4 billion as a result of investment income of R88, 2 billion and contributions of R80, 2 billion. The fund outperformed its benchmark by 0.22%.

The adverse economic climate in South Africa led to the sharp rise in the bond yields in March 2020 resulting in the value of the Fund’s liabilities reducing considerably as at 31 March 2020. This reduction in liabilities would have resulted in the funding level of the GEPF increasing but the unintended consequence would have been a marked decrease in member exit benefit values (calculated using the Actuarial Interest Factors derived from the actuarial valuation) for the upcoming years, until the results of the next statutory valuation is approved.

Given the abnormal economic shocks and the impact on member benefits, the Board of Trustees resolved to carry out an interim valuation as at 31 March 2020 that will be followed by a statutory valuation as at 31 March 2021. The postponement of the statutory valuation to March 2021 is still within the timeframe prescribed for actuarial valuations by the Government Employees Pension Law.

Benefit payments to members will continue to be made in accordance with the approved Actuarial Interest Factors, which came into effect on 1 July 2019, until the statutory valuation as at 31 March 2021 is completed. These safeguards members from the adverse effect that would have resulted from adopting the Actuarial Interest Factors based on abnormal circumstances as at 31 March 2020.

In line with the Fund’s commitment to ensure all benefits due are paid, the total benefits paid during the year under review increased by R8.4 billion, mainly due to the increase in pension payments, which accounted for 49% of the total increase. The increase in the pension payments were driven by the 5.2% monthly increase granted to pensioners from 1 April 2019 and a 3.1% increase in the number of pensioners.

Whilst the number of pensioners increased, the Fund also experienced a slight increase in active members by 0.3% to 1 269 161 members (2019: 1 265 421).

The GEPF expects the difficult economic climate in South Africa to persist as the economy continues to contract. Following the conclusion of its consultation with the Minister of Finance on its asset-liability modelling the GEPF over a period, will begin to align its strategic asset allocation to match its liability profile. The strategic asset allocation determines how the GEPF allocates funds to asset classes locally and offshore.

The GEPF is keenly aware of the important role it plays in the South African economy, and that its members, pensioners and beneficiaries are impacted by economic, social and environmental challenges, in recognition of which the GEPF continues to direct funds towards the development of the country, inclusive of infrastructure, transformation, sustainability, priority sectors and small –medium enterprises. Such investments however must ensure beneficial returns to the GEPF.

The GEPF expresses its appreciation to its implementing agencies, the Public Investment Corporation (PIC) and Government Pension Administration Agency (GPAA) for the work they do to ensure that the GEPF fulfils its mandate.

/Ends

The Audited Financial statement can viewed on the GEPF website on www.gepf.co.za

Issued by Government Employees Pension Fund

For more information, please contact:

Matau Molapo, Communications division

T: +27 (0) 12 424 7315

M: +27 (0)79 1910 757

E: Matau.molapo@gepf.co.za

About the Government Employees Pension Fund

The Government Employees’ Pension Fund is one of the largest pension funds in the world, with over 1.2 million active members and over 450 000 pensioners and beneficiaries. Our core business, governed by the Government Employees’ Pension Law (1996), is to manage and administer pensions and other benefits for government employees in South Africa.

We work to give members and pensioners peace of mind about their financial security after retirement, moreover during situations of need by ensuring that all funds in our safekeeping is responsibly invested and accounted for and that benefits are paid efficiently, accurately and on time.

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GEPF congratulates Abel Sithole on his appointment

28 May 2020
The Government Employees Pension Fund welcomes the appointment of Mr Abel Sithole as the new Chief Executive Officer of the Public Investment Corporation (PIC).
The GEPF chairperson, Dr Renosi Mokate, on behalf of the GEPF Board of Trustees and its employees congratulates Mr Sithole on his appointment and wishes him well at the PIC.
“We thank Abel for his hard work and dedication to the Fund and its stakeholders. He brought stability and direction to the GEPF at the time when stability was needed and we are assured that he will do the same at the PIC. This is not a goodbye but see you later, said Dr Mokate.
Referring to his appointment, Mr Sithole said, “I am honored to have served the GEPF and leave behind a strong organization and a great team which I had the privilege to lead.” The GEPF will in due course announce the process it will undertake to appoint its next Principal Executive Officer.
/Ends
Issued by Government Employees Pension Fund

 

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