GEPF investments portfolio registers a positive 2.6% growth despite weak SA economy

05/12/2019

Thursday, 5 December 2019. Johannesburg – The Government Employees Pension Fund (GEPF) is pleased to announce its financial results for the year ended 31 March 2019.

Despite the tough economic conditions and low economic growth rate in South Africa, the GEPF had a return on investments of 2.6%, equating to R 47 billion during the 2018/9 financial year. The Fund’s market value of assets was R 1.82 trillion in the year under review, increasing by R 17 billion compared to the previous year.

The growth of the fund’s assets is pleasing as it is in contrast to the collective performance of the top 300 pension funds in the world whose assets under management (AUM) decreased by 0,4% in 2018.

The GEPF has also continued to generate healthy long-term returns in line with its long-term investment strategy. The accumulated funds and reserves grew an average of 11.2 % during the period 2009 – 2019.  This performance is in line with our approach of long-term growth in pursuit of sustainable risk-adjusted returns.

Despite the prevailing economic headwinds, the Fund’s annual return exceeded its benchmark return of 2.3%. This was due to improved performance from commodity prices, which favoured the Fund’s tactical overweight position in resources shares relative to its benchmark. The long-term returns were largely driven by the performance of the local equity and bond markets, which was favourable over the long term.

The financial results once again highlights that the performance of the fund is not isolated from the country economic and development constraints. If the GEPF is to address this dependence, it has to consider further diversification including increasing its off-shore investments.

It is important to note that the GEPF invests in line with international best practice, diversifying its portfolio of investments through the PIC and other asset managers, to reduce its exposure to any one market risk, and thereby maximizing its return on investments. These decisions are guided and made in accordance with GEPF’s strategic asset allocation policy and risk management systems.

The fund also experienced an increase in member contributions by 7.1% during the reporting period, representing an R 5 billion increase from R 70 billion in 2018 to R 75 billion in 2019.  Benefits to members upon resignation, retirement, death and funeral benefit also increased.

The total benefits paid during the year under review increased by R 8 billion, mainly due to the increase in pension payments ,which accounted for 45,8% of the total increase. The increase in the pension payments were driven by the 5.5% monthly increase granted to pensioners from 1 April 2018 and a 3% increase in the number of pensioners. Whilst the number of pensioners increased, the fund experienced a slight decrease in active members by 0.6% to 1 265 421 members (2018: 1 273 125)

The funding level is the Fund’s financial gauge. The higher the funding level, the better the financial situation. The results of the March 2018 actuarial valuation show that the Fund is 108.3% funded, i.e. there are sufficient assets to cover the actuarial liabilities in full.

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 directed 5% of its total portfolio towards domestic development inclusive of infrastructure, transformation, sustainability priority sectors and small –medium enterprises.

The GEPF appreciates 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 be reviewed on the GEPF website on www.gepf.co.za

Issued by Government Employees Pension Fund

For more information please contact:

Sonke Dandala, Brand Manager

T: +27 (0) 12 424 7340

M: +27 (0)84 665 1006

E: Sonke.dandala@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 and during situations of need by ensuring that all funds in our safekeeping are responsibly invested and accounted for and that benefits are paid out efficiently, accurately and on time.

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Minister of Finance appoints new GEPF Board

The Minister of Finance, Mr Nhlanhla Nene yesterday convened the first sitting of the new Government Employees Pension Fund (GEPF) Board of Trustees following the end of tenure of the previous Board. 

The new Board elected Dr Renosi Mokate as Chairperson and Mr Edward Kekana as Vice Chairperson. Both Trustees have been re-appointed to the GEPF Board.
  
The Board of Trustees comprises of 16 members, eight nominated by employer and the other eight nominated by employees. The names of the new Board of Trustees is as follows:

Employer Representative Trustees

Department – Name
National Treasury – Mr Stadi Mngomezulu (Re-appointed)
Department of Defence- Maj Gen Mulungisa Sitshongaye
State Security Agency – Ms Jennita Kandailal
Department of Basic Education – Dr Morgen Pillay (Re-appointed)
DPSA – Mr Thabo Mokwena
SAPS – Lt Gen Lineo Ntshiea
Specialist – Dr Renosi Mokate (Re-appointed)
Specialist – Mr Themba Gamedze (Re-appointed)

Employee Representative Trustees
Department – Name
NEHAWU – Ms Kgomotso Makhupola (Re–appointed) 
SADTU – Mr Edward Kekana (Re-appointed)
NATU- Mr Alan Thompson 
PSA – Mr Pierre Snyman (Re-appointed)
DENOSA – Mr Sibonelo Cele
POPCRU – Adv Makhubalo Ndaba (Re-appointed) 
Uniformed Services – Col Johan Coetzer (Re-appointed)
Pensioner – Dr Frans le Roux (Re-appointed)

The GEPF Chairperson Dr Renosi Mokate welcomed trustees to the GEPF Board and wished them well in their term of office. She thanked the previous Board with whom she had worked with and congratulated them on their achievements over the last four years. GEPF Principal Executive Officer (PEO) Abel Sithole said, “The staff of the GEPF and I welcome the new Trustees to their positions and look forward to their contribution and guidance in the services of members, pensioners and beneficiaries”.

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Statement by the Government Employees Pension Fund on the suspension of PIC Officials

The Government Employees Pension Fund (GEPF) is extremely perturbed by the latest announcement by the Public Investment Corporation (PIC) that it has suspended its Executive Head of Listed Investments, Mr Fidelis Madavo and the Assistant Portfolio Manager, Mr Victor Seanie, following a preliminary investigation report that reflects the flouting of governance and approval processes with respect to the Ayo Technology Solution transaction.

Of serious concern to the GEPF is that the PIC had assured the GEPF on numerous occasions and in correspondence that correct governance processes were followed with respect to the Ayo Technology Solutions transaction. The GEPF views this as a serious breach of trust.

The PIC invested in Ayo Technology Solution as part of the listed portfolio mandate. Thus at the time of its listing, the investment in Ayo fell outside of the unlisted investment portfolio within which there are set governance processes and there are limits set for the PIC to engage the GEPF.

Although the total unlisted investments portfolio comprises less than 5% of the total assets of the Fund, it represents a significant amount of funds. These are funds that the GEPF invests into, contribute to the real economy of the country and to drive transformation but still aiming to realise it main objective of maximising returns. When the actions of officials bring this intention into question, it undermines the objective to invest in the real economy of the country and may lead to a review that may deprive the economy of greatly needed investment.

Despite the apparent failures on this and other 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 GEPF requests of the PIC Board to urgently finalise its investigations of alleged impropriety with respect to the Ayo transaction and others and take appropriate action where it is warranted.

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STATEMENT: GEPF position on Steinhoff shareholding

Government Employees Pension Fund (GEPF) has taken note of the current concerns regarding possible lapses in governance at Steinhoff International Holdings and assures its members, pensioners and beneficiaries that their pensions are safe. 

As at 31 March 2017 the GEPF through PIC owned about R28billion in Steinhoff International Holdings which is about 10% of the shares of the company but 1% of the total assets of the Fund. The impact of significant movement in the share price on the GEPF is significant but manageable. 

As a defined benefit fund, the movement in the value of individual investments does not affect the benefits to members and pensioners. Therefore benefits to members and pensioners are safe. 

The GEPF expects the highest standards of corporate governance from all investee companies. Allegations of accounting irregularities by Steinhoff International Holdings N.V., that have exposed the company to possible criminal investigations, are a serious concerns for the GEPF. 

The GEPF through the PIC is monitoring the situation while awaiting further information from investigations by domestic and international regulators and/or law enforcement agencies, to decide on an appropriate course of action.

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Preliminary List of Candidates 2018

GEPF PENSIONER MEMBER TRUSTEE ELECTIONS 

PRELIMINARY LIST OF CANDIDATES – 16 JANUARY 2018 

Below is a Preliminary List of Candidates for the GEPF Pensioner Member election for objection purposes. Objections must be submitted in writing to the Returning Officer via the following: 

FAX: 086 428 1356 | EMAIL: elections@gepf.co.za 

THE CLOSING DATE FOR OBJECTIONS IS 21:00 ON 19 JANUARY 2018 

1 BUSO LUTHANDO GILBERT 

2 CHABALALA RISIMATI WILLIE 

3 CHUEU MACHA SAMUEL 

4 CURRIE MADELIEF 

5 DAVIS STANLEY 

6 DE VILLIERS DANIEL JOHANNES 

7 DE WIT ANDRIES LOURENS 

8 FERGUSON MALCOLM GRANT 

9 HECKROODT DR ANNETIA SOPHIA 

10 LE ROUX, DR FRANS FRANCOIS 

11 MABOYE MOSIDI MIRRIAM 

12 MACHETHE MPEDI ALPHEUS 

13 MAGAELA MAMPURU ELIAS 

14 MAHOLWANA KUTALA EMELINE 

15 MBOKAZI SIMON ZWELIBANZI 

16 MENONG MORAOLE ISRAEL 

17 MONTJANE LESIBA DAVID 

18 MOTIANG MMUTLE JOHANNES 

19 MQAMKANA SAMSON MPHAKANYANA 

20 MUNASUR AMICHAND 

21 NAICKER NIRANJANI 

22 NEL FREDERICK 

23 NGOETJANA VINCENT MANARE 

24 ROJI OLYMPIA NOKWANDA 

25 ROMIJN GYSBERTUS HENDRIK ERNEST 

26 SAMBO ALBERT VIKIMPI 

27 SEABI MAUDU JOHANNES 

28 SERFONTEIN GIDEON JOHANNES 

29 SHABANGU, BRIG HARRY 

30 SIFUNDZA MHLABA STEVE 

31 STRAUSS HENDRIK HERMIAS 

32 THOMPSON ISA 

33 VAN EYK MULDER 

34 WATSON ESTHER BARBARA 

35 WIID ANTON JOHANNES

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Government Employees Pension Fund pensioners receive 5.5% annual pension increase.

Government Employees Pension Fund (GEPF) has announced an annual pension increase of 5.5% to its pensioners and beneficiaries with effect from 1 April 2018. 

The GEPF has granted this increase to enable pensioners and beneficiaries to keep up with rises in inflation. Inflation over one year until 30 November 2017 was 4.6% thus making the increase granted higher than inflation and higher than the 75% of Consumer Price Index (CPI) provided in terms of GEP Law and Rules. 

An analysis of the assets held by the Fund in relation to the valuation of its liabilities undertaken in 2016 showed that the Fund is 115.8% funded, which means that there are sufficient assets in the Fund to cover its actuarial liabilities in full. However, increases above those provided for in GEP Law and Rules is granted at the discretion of the Board taking the Fund’s investment performance into account. 

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How does the GEPF recover tax on behalf of SARS?

All GEPF clients (members, pensioners and beneficiaries) have the responsibility to submit their tax returns to SARS every year during the income tax return season. Pensioners and beneficiaries should obtain the IRP5 from GEPF in order to submit their income tax returns in line with requirements. Active members can obtain these from their employers. 

Please note if the source of income is only from GEPF (no other income sources and no other pension from GEPF (e.g. husband or wife pension in addition to the pensioner’s pension) and the pension is R350 000 or below, and the GEPF deducted the correct tax and no deductions or medical tax credit rebate that the pensioner wants to claim, the pensioner is not required to submit an income tax return. 

Take note: 

Receiving income from more than one income source 

If a pensioner or beneficiary is receiving income from more than one source and each pays money to SARS on your behalf for tax, you might be paying less tax than you need to because the combined income may put you into a higher tax bracket. This means you will have to pay in more at the end of the tax year when SARS gives you an assessment after you submit your income tax return. You can however request the GEPF in writing to deduct additional tax to make provision for an extra deduction paid to SARS. This could prevent pensioners from paying higher arrears to SARS upon tax assessment. Additional tax /voluntary tax deductions will be added to the PAYE on the IRP5 certificate at the end of the tax year. 

Garnishee orders (IT88/AA88) from SARS 

SARS legally appoints the employer (GEPF) in terms of Section 179 of the Tax Administration Act ,28 of 2011 to withhold and immediately pay over to SARS monies/tax owed in the form of AA88 and IT88 (garnishee orders) .. These deductions will not be updated or included on the tax certificate issued at the end of the tax year. The request to cancel the garnishee order will only be done upon receipt of a Withdrawal of Third Party Appointment letter from SARS.

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Minister of Finance appoints new GEPF Board

The Minister of Finance, Mr Nhlanhla Nene yesterday convened the first sitting of the new Government Employees Pension Fund (GEPF) Board of Trustees following the end of tenure of the previous Board. 

The new Board elected Dr Renosi Mokate as Chairperson and Mr Edward Kekana as Vice Chairperson. Both Trustees have been re-appointed to the GEPF Board. 

The Board of Trustees comprises of 16 members, eight nominated by employer and the other eight nominated by employees. The names of the new Board of Trustees is as follows: 

Employer Representative Trustees 

Department – Name 

National Treasury – Mr Stadi Mngomezulu (Re-appointed) 

Department of Defence – Maj Gen Mulungisa Sitshongaye 

State Security Agency – Ms Jennita Kandailal 

Department of Basic Education – Dr Morgen Pillay (Re-appointed) 

DPSA – Mr Thabo Mokwena 

SAPS – Lt Gen Lineo Ntshiea 

Specialist – Dr Renosi Mokate (Re-appointed) 

Specialist – Mr Themba Gamedze (Re-appointed) 

Employee Representative Trustees 

Department – Name 

NEHAWU – Ms Kgomotso Makhupola (Re–appointed) 

SADTU – Mr Edward Kekana (Re-appointed) 

NATU – Mr Alan Thompson 

PSA – Mr Pierre Snyman (Re-appointed) 

DENOSA – Mr Sibonelo Cele 

POPCRU – Adv Makhubalo Ndaba (Re-appointed) 

Uniformed Services – Col Johan Coetzer (Re-appointed) 

Pensioner – Dr Frans le Roux (Re-appointed) 

The GEPF Chairperson Dr Renosi Mokate welcomed trustees to the GEPF Board and wished them well in their term of office. She thanked the previous Board with whom she had worked with and congratulated them on their achievements over the last four years. GEPF Principal Executive Officer (PEO) Abel Sithole said, “The staff of the GEPF and I welcome the new Trustees to their positions and look forward to their contribution and guidance in the services of members, pensioners and beneficiaries”.

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IRP5 NOTICE

Dear GEPF Pensioner/Beneficiary 

The Government Pensions Administration Agency (GPAA) has been made aware that some pensioners/beneficiaries may have not yet received their IRP5 certificate. The delay is attributable to a backlog at the South African Post Office that was caused by the recent workers strike. The South African Post Office have assured us that they are dealing with the matter. We trust that you will receive your IRP5 in due course. 

If you wish to receive your IRP5 via email or send a query, please contact us on Tax@gpaa.gov.za.or 0800 117 669 

We also wish to take this opportunity to encourage our pensioners and beneficiaries to update their personal details (email, postal address and cellphone numbers) so that all correspondence can reach the correct recipients.

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GEPF INVESTMENT BELIEFS

The investment beliefs adopted by the Board of Trustees in March 2017 are stated below: 

2.1. The GEPF’s investment strategy considers the Fund’s risk profile, assets and liabilities. Risk is considered at the asset class, portfolio, and investment levels. 

2.2. Taking well-considered risks is necessary to earn the returns required to meet the Fund’s pension obligations, provided that appropriate risk management processes are followed. 

2.3. The Fund’s strategic asset allocation is the key determinant of portfolio risk and return, and it may be implemented through a combination of active and passive management. 

2.4. The GEPF integrates Environmental, Social and Governance factors into its investment policies as they are material to the long-term sustainability of the Fund. 

2.5. The Fund’s investments should play a developmental role in the South African and broader African economy, and investment decisions may reflect wider stakeholder views. 

2.6. The Fund’s reputation must be supported by robust and rational investment decisions, executed by appropriately skilled and competent investment professionals. 

2.7. Minimising the costs of investing is vital for long term investment success, and management fees should promote an alignment of interests between the Fund and its managers. 

2.8. The Fund’s trustees, administrators and investment managers are accountable for their decisions, and must perform their duties to the highest professional ethical standards. 

2.9. The Fund’s trustees commit to high standards of openness, transparency and appropriate disclosure in line with best practice standards.

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