GEPF investment portfolio grows 27.5%

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

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

It shows that the fund’s investment portfolio has grown 27.5% or by R451 billion for FY2021.

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”.
• Investment market value increased by 27.5% (2020: decline 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).
• Member contributions amounted to R82 billion (2020: R80 billion), and 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’s investment strategy aimed at achieving long-term growth is successfully contributing to the financial soundness of the fund”.

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

This follows a contraction in 2020.

The fund’s unlisted and property portfolios however bore the brunt of market conditions resulting from the impact of the Covid-19 pandemic on the economy, and suffered a decline.

“In this regard, impairment provisions had to be made to reflect the business reality of an asset at a particular point in time. As a result, the GEPF implemented a very conservative valuation of its unlisted and property assets. Such a valuation approach was done fully aware that improved market conditions could see assets subsequently recover or even exceed the value of the original investment.”

Read: The PIC is on the commercial property acquisition trail

The value of impairments decreased to R7.4 billion in 2021 (2020: R11.9 billion). The GEPF also reversed some R2.1 billion impairments of assets which were impaired in previous years.

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

Its retirement claims for 2021 were R76 billion (2020: R69.1 billion). The fund’s active members 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 enhance and strengthen its oversight and monitoring of the GPAA and the Public Investment Corporation (PIC), including:

• Carrying out a comprehensive review of the fund’s investment policy, investment mandate and management agreements with the PIC, including more stringent consequence management, a review of the fee models, and improved investment and reporting guidelines.
• Carrying out a review of the fund’s operating model and 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 on its future growth and will continue to play its part in growing the South African economy.

Listen: GEPF principal executive officer Musa Mabesa on the year-ending March 31 (or read the transcript)