The Government employees pension fund (GEPF) is the largest pension fund by investment value that invests the retirement savings of all South African Government employees.
The GEPF is currently seeking to increase it’s exposure to foreign markets and currencies as well as unlisted investments like the PIC. The primary motivater it would seem is the poor performance of the JSE the last few years and the demand for better returns by Governement and contributors to the GEPF. Even though the worlds markets have been performing very badly, larger exposure to foreign markets could have made a significant difference in the performance of the fund when the currency is taken into aqccount.
The GEPF is currently able to invest a maximum of 10% offshore, a vast difference to private retirement investment funds which are able to invest as much as 30% offshore.
This could be construed as a negative outlook on the economy or the currency by a Government body but GEPF are simply saying it would seem that too many of their eggs are in one basket, that being 50% exposure to the JSE. The GEPF is a defined benefit fund which means they are heavily reliant on investment returns to meet their obligations. GEPF is currently paying out more than it is receiving in contributions which is of course not sustainable and something needs to change in order to reverse the situation.
You would think the Government would pay more attention to stimulating growth and encouraging direct foreihgn investment to help grow the economy in times like these but it vseems that electioneering and making unrealistic promises for votes is more important in an election season.
The simple scenarios make for terrible reading unless the JSE starts offering better returns or the currency devalues and the GEPF is able to invest a higher percentage offshore. Ultyimately, there few methods that the GEPF can contain the problem and that is by giving less to the members or getting more from Government.
So what exactly is the GEPF asking for? They are asking for two opportunities in the main. Firstly they wish to increase the funds exposure to foreign markets and secondly to make invetments in unlisted stocks.
This article was adapted and commented on from an article written by Business live
Frequently asked questions about the GEPF
What is the value of the GEPF value of Governement employee investments under management? R1.8 Trillion
How many active members does the GEPF have? Over 400 000 beneficiaries with over 1.2 million active members.
What was the GEPF annual increase to pensioners in 2018 (effective 1 April 2019)? 5.2%
What is the official retirment age of GEPF members: 60 years old.
Can a GEPF pensioner or beneficiary get a SASSA grant? Any GEPF pensioner who is unable to make ends meet and meets the requirements for a SASSA grant, is entitle to napply for a grant. It is entirely up to SASSA to approve or decline the application.
Where can I find the GEPF annual reports? All of the GEPF’s annual reports are available for download at the following link >> GEPF annual reports
What is a defined benefit fund? A defined benefit fund guarantees benefits according to the rules. The GEPF calculates benefits based on the Fund’s rules, and the amount is determined based on the number of years of service you have and your final average salary over the last two years of your employment.