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