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Cape Town - The Government Employees Pension Fund (GEPF) has released its annual report for the financial year 2014/2015, which, according to principal executive officer Abel Sithole, reflects its steady growth and a sustainable investment strategy.
GEPF board chair Dr Renosi Mokate said the fund had continued to grow its assets and membership despite local and global economic challenges. The GEPF is required to invest 90% of its assets in South Africa, and as such remains the single largest investor in the Johannesburg Stock Exchange (JSE). It has an international allocation limit of 0% to 5% in the rest of Africa and 5% elsewhere internationally.
“Through our commitment to environmental, social and governance (ESG), GEPF plays a critical role in driving the corporate sector towards adopting sustainable business practices that generate long-term financial rewards and have a positive impact on South Africa’s labour force, our communities, and the environments affected by corporate activity," said Sithole.
"However, we must never lose sight of the fact that the fund’s primary role is to ensure the financial wellbeing of its members and pensioners.”
GEPF’s membership as of March 31 2015 comprises 1 266 101 active members - compared to 1 276 753 in 2014 - and 406 395 pensioners - compared to 391 071 in 2014. The fund’s accumulated funds and reserves for the reported period were R1 591bn - compared to R1 426bn in 2014. The fund invests in a pro-growth manner, with 64% invested in equities and properties, with the remaining 36% invested in bonds and cash.
The fund receives a percentage of members’ pensionable salaries as contributions. Contributions received increased in the current year by R6bn to approximately R56.48bn. This increase was mainly due to annual salary increases as well as promotional and notch increases given to members.
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.
Sithole said that the performance of the fund at 14.1% was close to the benchmarked return of 14.2% and enabled the Board to grant a 5.8% pension increase for the 2014/2015 financial year.
“The increase is higher than a 100% consumer price index (CPI) as at November 30 2015 and attests to the fund’s endeavour to ensure that its investment performance enables pensioners to retain their purchasing power,” said Sithole.
The report pointed out that the Government Pension Administrative Agency (GPAA), its administrative sector, paid out R78.34bn on behalf of the GEPF and endeavoured to achieve its target of paying benefits accurately. In addition, it managed to pay 91% of benefits within the prescribed period.
