In the 20 years of its existence, South Africa’s Government Employees Pension Fund (GEPF) has shown steady growth and a sustainable investment strategy, according to the fund’s latest annual report.
The GEPF said in the report released here Wednesday that in addition to steady growth, the fund had seen continued dedication and service to its members and pensioners. “The 20-year anniversary marks an important milestone for the GEPF as we look back on our legacy and accomplishments,” said Principal Executive Officer Abel Sithole.
In the financial year 2015/16, the assets of the fund grew to over 1.6 trillion Rand (about 118.8 billion US dollars). The GEPF achieved an overall investment performance return of 4.0 per cent during this time.
This enabled the board to grant a pension increase of 5.3 per cent, which was more than 100 per cent of the consumer price index (CPI) change of 4.8 per cent, as at November 2015. This is higher than the 75 per cent increase recommended by the rules of the fund.
“The GEPF’s investment strategy uses a liability-driven approach that takes into consideration expected future benefit payments, the actuarial position, and other long-term objectives, as well as the risk to the overall solvency of the fund,” said Sithole.
The GEPF was established in 1996 when various public sector pension funds were amalgamated into one fund. In that year, the GEPF started out with assets under management of 127 billion Rand, which has since increased to more than 1.6 trillion Rand.
The GEPF is currently the single largest investor in companies listed on the Johannesburg Stock Exchange (JSE), and also has significant holdings in government bonds, listed equity, money markets, as well as investments in unlisted equity and property.
Accumulated assets have grown at an average rate of 12.09 per cent over the past 10 years. This growth has been in tandem with an improvement in the GEPF’s funding level, an increase from 72 per cent in 1996 to 100 per cent in 2014 (according to the actuarial valuation of 31 March 2014).
“The GEPF is proud of this achievement as it is currently one of very few large defined benefit pension funds in the world which is 100% funded after the 2008/2009 financial crisis. This reflects the Fund’s robust investment strategy and its ability to adapt to dynamic and turbulent market forces”.
The total membership of the GEPF now stands at 1,693,078, consisting of 1,269,948 members who are still in service and 423,130 pensioners and beneficiaries.
“The good news is that the benefits paid decreased by 3.0 billion Rand in the current year, mainly due to a decrease in resignations from the fund. Looking back at the achievements of the last 20 years, the GEPF will continue to ensure the financial security and strive for superior levels of service for its pensioners and members,” said Sithole.
“It will be a catalyst for change in terms of securing investment opportunities locally, regionally, and globally to meet its pension liabilities.”
Source: NAM NEWS NETWORK.