Author Archives: Jo Nape

MEDIA RELEASE

20 November 2023, Pretoria

The Government Employees Pension Fund (GEPF) is pleased to announce its financial results for the year ended 31 March 2023.

Key Performance Indicators:

• Investment portfolio increased by R27.1 billion to R2.32 trillion from the previous financial year
• Investment market value increased by 1.2%
• Return on Investment of 3.5%
• Accumulated funds and reserves grew at an average annual rate of 6.65% for the 10-year period 2014-2023
• Net investment income of R82.2 billion (interest income of R 56.7 billion, dividend income of R56.4 billion and property income of R 2.03 billion)
• Member contributions of R83.1 billion • Benefits paid of R 137.4 billion
• Benefits paid of R 137.4 billion

In a period of uncertainty including poor economic performances, globally and in South Africa, the financial year 2022/23 was a challenging year for investors around the world. Despite these challenges, the GEPF investment portfolio recorded growth of 1.2% to a market value of R2.32 trillion, the largest in its history. This represents a growth of R27.1 billion, a 3,5% return on investment. Net investment income for the year amounted to R 82.2 billion, derived largely from dividend income of R56 billion, interest income of R 56.7 billion and net profit on sale of investments of R22.2 billion.

The positive performance can be primarily attributed to the positive performance of bonds and the depreciation of the local currency. The GEPF’s 10-year annualised return was 6.65%, illustrating financial stability with a funding level of 110.1%.

The modest growth amidst the tough economic conditions illustrates that the Fund has been very resilient, and that the Fund’s investment strategies continue to protect the Funds’ assets. The investment for the financial year is satisfactory, noting the tough and volatile economic conditions that global and local investors faced. Staying the course and not panicking when faced with sudden market volatility remains a crucial aspect of GEPF’s strategy.

Active membership remained stable over the year, while pensioner membership steadily increased. Active membership increased from 1 261 363 in 2021/22 to 1 267 307 in 2022/23 and contribution income increased by 1.39% during the reporting period. The increase is mainly because of an increase in retirements, resignations, and child pensions, while funeral and death benefits decreased.

The number of pensioners increased from 322 223 in 2021/22 to 336 629 in 2022/23. The total value of gratuities paid was R22.3 billion and annuities paid was R70.4 billion. The Fund finalised 37 440 retirement claims compared with 33 627 in 2021/22, reflecting an increase of 11% in claims. Resignation benefits paid amounted R32,9 billion (2022: R33,8 billion), R9,8 billion (2022: R14,8 billion) was paid in death benefits and funeral benefits worth R416 million were paid (2022: R550,1 million). Spouses pension benefits to the value of R12.1 billion (2022: R11.5 billion) were paid to 171 592 beneficiaries (167 679 in 2021/22), and R948.8 million (2022: R551.4 million) was paid in child pension benefits to 15 809 qualifying children (2021/22: 9 824).

These figures illustrate the GEPF’s commitment to meet its financial obligations and pay benefits to its members, pensioners, and beneficiaries. The Fund remains cash flow positive with R53 billion as of 31 March 2023. This is largely attributable to benefits paid of R137 billion, net investment income received of R107 billion, and contributions received of R83 billion.

The GEPF revised the mandate agreement with the Public Investment Corporation (PIC) for listed and unlisted investments during the 2021/22 reporting period and the revised agreements were signed effective from 01 April 2022. The revised mandate seeks to strengthen governance over the execution of the investment strategy by the PIC (on behalf of the GEPF), create a more harmonious legal framework, improve the focus and implementation of investment guidelines, and introduce accountability mechanisms in case of poor investment decisions. There is a need for greater transparency and accountability in the relationship between the GEPF and the PIC.

Furthermore, the GEPF and its administrator, the Government Pensions Administration Agency (GPAA) are exploring different models and methods to improve the payment of benefits. Over the past financial year, several initiatives were launched to realise this goal, including enhanced collaboration with employer departments, labour unions and continuing member and beneficiary outreach initiatives.

The new GEPF Board was appointed in July 2022 and is committed to growing the Fund as well as ensuring that the Fund becomes more efficient and effective in benefits administration and its investment strategies.

/Ends

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

Issued by Government Employees Pension Fund Media
Enquiries:
Matau Molapo

T: +27 (0) 12 424 7315

M: +27 (0)79 1910 757

E: Matau.molapo@gepf.co.za

2 March 2023, Pretoria

There is an old video from as far back as early 2020 that is recirculating on social media of the current mayor of Cape Town, Mr. Geordin Hill-Lewis, before he became the mayor, in which he states that the GEPF intends to bail out Eskom to the tune of R250 billion. The GEPF would like to provide some clarification regarding this matter for the benefit of GEPF members and pensioners.

The GEPF is guided by clear and transparent processes in line with the GEP Law and its investment strategy when undertaking investments on behalf of the Fund. Proposals have to be formally presented to the GEPF Board of Trustees, who then consider whether the proposed investments would ensure the sustainability of the Fund and provide reasonable financial returns for the GEPF.

In this regard, no proposal has been presented to the GEPF by any institution with regards to bailing out Eskom. This is therefore not a matter that is currently under consideration by the GEPF and its Board of Trustees. Should such a proposal be presented, the GEPF Board of Trustees will apply its mind in line with its mandate and fiduciary duties to ensure the sustainability of the Fund and accordingly take the most appropriate decision.

Issued by Government Employees Pension Fund

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

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

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