How the Government Employees Pension Fund works
What you need to know about the GEPF, the largest pension fund in Africa
Since its establishment in 1996, the Government Employees Pension Fund (GEPF) has grown its worth from R127bn to more than R1.8-trillion, becoming Africa’s largest pension fund. It is also the largest investor in the JSE, playing a critical role in SA’s development.
The GEPF is a benefit fund, meaning that pensions and benefits are guaranteed in terms of the Government Employees Pension Law and not calculated on the basis of how the fund is invested. The amount will depend on the years of service in the GEPF and the final salary at the time the member exits the fund.
Because GEPF member benefits are determined by the rules and not by the fund’s investments, the government, as the employer, guarantees the benefits will always be paid.
The fund is currently 108.3% funded, meaning the GEPF is able to meet all its liabilities.
How funds are invested by the GEPF
The board and management of the GEPF take their fiduciary responsibilities seriously and act in the best interests of its members, pensioners and beneficiaries at all times. This can be illustrated by the growth in the fund, which is nearing R2-trillion.
The GEPF board and management have put in a number of mechanisms to ensure its asset managers, such as the Public Investment Corporation, act within the mandates provided. How the GEPF invests its funds is a carefully thought-out strategy aimed at achieving long-term growth for the fund.
The strategy is focused on ensuring that the GEPF allocates and manages the fund’s assets so that it meets or outperforms the fund’s current and future liabilities, which has been done successfully in its 22 years of existence. The fund has also adopted a responsible investment policy that integrates environmental, social and governance issues in its investment decisions.
The GEPF also has a developmental investment policy that focuses on targeted investments that contribute to positive economic, social and environmental outcomes for SA, while earning good returns for members and pensioners.
The fund operates within the Government Employee Pension Law and Rules, which defines precisely how it should be governed and how it should administer pension and related benefits to members, pensioners and beneficiaries.
This article was paid for by the Government Employees Pension Fund.