A buoyant year for GEPF
Fund records healthy 8.3% growth despite R40bn losses from Eskom and Steinhoff
THE Government Employees Pension Fund (GEPF) announced an 8.3% increase in financial results for the year ended March 31, 2018.
Principal financial officer of the fund Abel Sithole said: “Despite the challenges and lack of financial growth in South Africa, GEPF’s investment has grown by an impressive R1.6 trillion in 2017 to R1.8 trillion.”
This was despite its investments in Eskom and Steinhoff, which between them resulted in an almost R40 billion loss.
“We are concerned about the management of both companies. Eskom has an almost R20 billion arrears bill as a result of customers not paying for electricity. This is unacceptable.
“We cannot exclude or cut them off as this will result in people and businesses grinding to a halt which will affect the economy,” he said.
The fund also suffered a loss of R18bn as a result of the devaluation of Steinhoff shares. Despite this, the fund had grown, said Sithole.
“The increase in the investment portfolio was as a result of the performance in domestic assets over the past year, particularly bonds and equities.
“Listed equities increased 10%, domestic bills and bonds 6%, the collective investment scheme (foreign) 7% due to new investments, while the unlisted domestic equities increased 37% as a result of a positive fair value adjustment and additions,” he said.
During the reported period, the GEPF investment yielded an average of 8.5% compared with R4.3% in 2017, based on the net investment income of R153bn as compared to the R72bn in 2016, a 112% increase.
“The GEPF’s accumulated funds and reserves had grown at an average rate of 10.21% over the past 10 years,” he said
“The past year has indeed been one of renewed affirmation for the GEPF as we continue to fulfil our mandate to effect meaningful and sustainable change through our investments.” The fund had also experienced an increase in member contribution during the reporting period from R65.6bn to R70.4bn, mainly because of salary increases that members had received during the year.
The total benefits paid during the year under review increased R6.6bn.
“We will continue evaluating our investment allocation with utmost care to achieve the most growth for our members, pensioners and beneficiaries,” Sithole said.
“With this in mind, we will be considering various options with respect to diversification of investments.
“This is imperative to ensure that there is a lower correlation between economic growth of the country and growth of our investment portfolio,” he added.
Sithole also expressed his appreciation to the GEPF’s implementing agencies, the Public Investment Corporation and Government Pension Administration Agency for the work that they did to ensure that the fund fulfilled its mandate.
The fund was one of the largest pension funds in the world with more than 1.2 million active members and over 400 000 pensioners and beneficiaries.
GOVERNMENT Employees Pension Fund principal executive officer Abel Sithole addresses the media on the fund’s financial results.