Monday, January 24

GEPF’s investment portfolio grows 27.5%


The Government Employees Pension Fund (GEPF) has reached a major milestone on the 25th anniversary of its founding, with the fund’s investment portfolio now valued at more than R2 trillion.

This is revealed in GEPF’s latest financial results for the year ended March 31, 2021, released on Monday.

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It shows that the fund’s investment portfolio has grown by 27.5% or R451 billion for fiscal year 2021.

Key performance indicators

  • The market value of the fund increased to R2.09 trillion in 2021 (2020: R1.59 trillion), “despite the turbulent and unpredictable market conditions during the financial year”.
  • The market value of the investment 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 grew at an average annual rate of 8.90% for the 10-year period (2012 to 2021).
  • Net investment income amounted to R483.8 billion (2020: R179.7 billion loss).
  • Members’ contributions amounted to R82 billion (2020: R80 billion), and the total benefits paid were R110.6 billion (2020: R111 billion).

The fund believes: “The growth in the value of assets under management (AuM) confirms that the GEPF investment strategy aimed at achieving long-term growth is successfully contributing to the financial strength of the fund.”

The GEPF noted that “the increase in the investment value of the fund is mainly due to the recovery of financial markets, particularly stocks and bonds.”

This follows a contraction in 2020.

However, the fund’s real estate and unlisted portfolios endured the brunt of market conditions stemming from the impact of the Covid-19 pandemic on the economy and suffered a decline.

“In this sense, provisions for impairment had to be made to reflect the commercial reality of an asset at a particular moment in time. As a result, the GEPF implemented a very conservative valuation of its real estate and unlisted assets. This valuation approach was made fully aware that improved market conditions could cause assets to later recover or even exceed the value of the original investment. ”

Read: PIC is on the way to acquiring commercial properties

The value of impairments decreased to R7.4 billion in 2021 (2020: R11.9 billion). The GEPF also reversed approximately R2.1 billion of asset impairments that had been impaired in previous years.

The GEPF pension administrator (GPAA) received 27,960 pension claims in 2021 (2020: 34,134), reflecting an 18% decrease in claims.

Their withdrawal requests for 2021 were R76 billion (2020: R69.1 billion). Active members of the fund decreased to 1,265,406 in 2021 (2020: 1,269,161). The number of pensioners in the fund decreased to 312,647 in 2021 (2020: 313,173).

Read:
The GEPF, an abused client
The GEPF faces five red flags

The GEPF has taken steps to improve and strengthen its supervision and monitoring of the GPAA and the Public Investment Corporation (PIC), including:

  • Undertake a comprehensive review of the fund’s investment policy, investment mandate, and management agreements with the PIC, including stricter consequence management, review of fee models, and improved investment guidelines and submission of reports.
  • Conducting a review of the fund’s operating model and the quality of service provided by the GPAA, including the benchmarking of administrative systems to meet the needs of the GEPF and its clients.

The GEPF says it remains optimistic about its future growth and will continue to play its role in the growth of the South African economy.

Listen: Musa Mabesa, CEO of GEPF, March 31 at the end of the year (or read the transcript)


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