Government Employees Pension Fund ‘blueprint works’
The Government Employees Pension Fund (GEPF) issued a statement last week to assure its members that the fund is displaying a "solid and steady performance".
This follows allegations by the Association for Monitoring and the Advocacy of the Government Employees Pension Fund (AMAGP) of poor management of the fund. The association expressed concern over the "low yields" of the fund's investments and the state of its cash flow.
The GEPF said in its statement that since its establishment in 1996, the fund has grown from R127-billion to almost R2-trillion. It is also the largest single investor in the Johannesburg Stock Exchange (JSE), but despite this "solid and steady performance", the organisation continues to receive often undeserved criticism.
The statement reads,
"The single most important characteristic of anyone wanting to understand the GEPF, is that it is a defined benefit fund, meaning that the GEPF promises benefits in terms of the rules set out in the Government Employees Pension Law and these benefits are not calculated on the basis of how the fund is invested.
“The pensions and the benefits due to members and pensioners are guaranteed in terms of the law.
“The only issues that matter in how members are paid, are the years of service that the members have in the GEPF and their final salary at the time they exit the fund, as these determine the amount of the pensions or pay-outs if one resigns.
"Investments and the growth of the fund from investments become a factor in lessening the burden on Government to ensure payouts. If the fund makes bad investments and does not have the funding to pay members, Government will be required to make the funds available to pay members. The GEPF's track record thus far does not indicate such a scenario. Incidentally, the fund is currently 115% funded, meaning the GEPF is able to meet all its liabilities."
The GEPF said the minister of finance cannot direct how funds are invested.
"Only the GEPF via its asset managers, the Public Investment Corporation (PIC) being one of them, can decide how funds are invested.
“This is done by providing asset managers with a mandate that outlines which type of investment can be made, the percentage allocations for each asset class, benchmarks, and performance targets, among other guidelines.
“The board and management have added a number of mechanisms to ensure the fund's asset managers act within the mandates provided. Its investment strategy is aimed at achieving long-term growth for the fund.
“It is focused on ensuring that they allocate and manage the fund's assets so that it meets or outperforms the fund's current and future liabilities, which has been done very successfully in its 22 years of existence."