The Government Employees Pension Fund (GEPF) has reached a milestone in the 25th anniversary of its founding, with the fund’s investment portfolio now valued at more than R2 trillion.
This is revealed by the latest financial results of GEPF for the fiscal year ended March 31, 2021, published on Monday.
It shows that the fund’s investment portfolio grew 27.5 percent or R 451 billion in fiscal 2021.
Key performance indicators
- The fund’s market value increased to R 2.09 trillion in 2021 (2020: R 1.59 trillion), “despite turbulent and unpredictable market conditions during the year.”
- The market value of investments increased by 27.5% (2020: decrease of 11.4%).
- The return on investment achieved is 23.1% (2020: negative 11.2%).
- Accumulated funds and reserves increased at an average annual rate of 8.90% for the 10-year period (2012 to 2021).
- Net investment income amounted to Rand 483.8 billion (2020: Rand 179.7 billion loss).
- Membership dues amounted to R82 billion (2020: R80 billion) and total benefits paid amounted to R111.6 billion (2020: R111 billion).
The fund believes: “The growth in the value of assets under management (AuM) confirms that GEPF’s investment strategy aimed at long-term growth is successfully contributing to the financial soundness of the fund”.
The GEPF noted that “the increase in the investment value of the fund is mainly attributable to the recovery in financial markets, in particular in stocks and bonds”.
This follows a contraction in 2020.
The fund’s unlisted and real estate portfolios, however, suffered the full brunt of market conditions resulting from the impact of the Covid-19 pandemic on the economy, and suffered a decline.
“In this regard, provisions for impairment had to be made to reflect the commercial reality of an asset at a given time. Consequently, GEPF has implemented a very cautious valuation of its unlisted and real estate assets. Such a valuation approach has been made with the full understanding that improving market conditions could see the assets subsequently recover or even exceed the value of the initial investment. ”
To read: The PIC is on the trail of acquiring commercial property
The value of write-downs decreased to 7.4 billion rand in 2021 (2020: 11.9 billion rand). GEPF also wrote off some R 2.1 billion in write-downs on assets that had been written down in previous years.
The GEPF pension administrator (GPAA) received 27,960 pension applications in 2021 (2020: 34,134), an 18% drop in requests.
His pension claims for 2021 were 76 billion rand (2020: 69.1 billion rand). The number of active members of the fund increased to 1,265,406 in 2021 (2020: 1,269,161). The number of retirees from the fund rose to 312,647 in 2021 (2020: 313,173).
GEPF, an abused customer
GEPF facing five red flags
GEPF has taken measures to improve and strengthen its oversight and monitoring of GPAA and the Public Investment Corporation (PIC), including:
- Carry out a comprehensive review of the fund’s investment policy, investment mandate and management agreements with the PIC, including tighter management of consequences, review of fee models and investment guidelines and improved reporting.
- Carry out a review of the operating model of the fund and the quality of the service provided by the GPAA, including the benchmarking of administrative systems to meet the needs of the GEPF and its clients.
GEPF says it remains optimistic about its future growth and will continue to play its role in growing the South African economy.
Listen: Musa Mabesa, GEPF Managing Director as of March 31 (or read the transcript)