A buoy­ant year for GEPF

Fund records healthy 8.3% growth de­spite R40bn losses from Eskom and Stein­hoff

The Star Early Edition - - METRO - ANNA COX [email protected]

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.

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