The Government Employees Pension Fund (GEPF) has applied a number of the recommendations made by the Mpati Commission of Inquiry into allegations of impropriety on the Public Investment Corporation (PIC) – the asset supervisor of the state pension fund.
GEPF Board of Trustees chair Dondo Mogajane confirmed this within the GEPF’s newest annual report, including that it represents an effort to additional strengthen and improve the GEPF’s funding processes, together with oversight of the PIC.
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The PIC manages 82.14% of the GEPF’s funding portfolio instantly, with the rest managed via a few native and worldwide exterior managers.
The recommendations the GEPF applied included:
- Reviewing and strengthening the GEPF’s funding coverage;
- Evaluating the funding technique, which resulted in an asset legal responsibility modelling train that led to a revised strategic asset allocation at the moment being applied;
- Reaching settlement with the PIC on benchmark returns, which has resulted in a revised mandate being signed for the listed and unlisted portfolios;
- Reviewing its inner funding monitoring construction to reinforce the monitoring and analysis of investments, with the GEPF board approving a reviewed construction and capability; and
- Strengthening its administration agreements, leading to sturdy tips and portfolio development within the funding implementation course of of its funds.
Mogajane mentioned these actions have resulted in additional stringent consequence administration, a evaluation of charge fashions, enhancement of funding and reporting tips, and an improved framework for accountable investing.
The Mpati Commission recognized improprieties, lapses in governance and deficiencies within the PIC’s operational construction. It additionally discovered that a number of transactions on the PIC had been funded with out following due course of consistent with accepted due diligence and company governance.
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This led to the PIC board revising the PIC’s Memorandum of Incorporation (MoI) with the federal government, its shareholder, and led to adjustments to the PIC working mannequin to treatment weaknesses attributable to an overconcentration of govt energy within the place of CEO.
Other measures taken by the PIC board included inner disciplinary motion that led to the dismissal of implicated employees and authorized motion associated to a number of transactions, together with these with Steinhoff, VBS and Ayo.
Mogajane mentioned the newly appointed GEPF board is dedicated to rising the fund and making certain it turns into extra environment friendly and efficient in advantages administration and its funding methods.
“In this regard, we will continue to improve our oversight and relationship over our service providers, the GPAA [Government Pensions Administration Agency] and PIC,” he mentioned.
To make sure the funding supervisor adheres to the up to date funding coverage and tips accredited in 2020, the GEPF reviewed, concluded and signed new funding administration agreements with the PIC that included each the listed and the unlisted funding administration agreements.
New agreements
The GEPF mentioned the brand new agreements changed the 2007 settlement along with all its subsequent addenda and consists of the character of the connection, the scope of the funding supervisor, funding governance and processes, portfolio tips, limitations, threat disclosure and charges.
“The agreements together with accompanying annexures seek to ensure good investment governance, adherence to GEPF investment policies and guidelines, proper checks and balance, adequate monitoring and oversight,” it mentioned.
Moneyweb requested remark from the PIC however a response has not but been obtained.
GEPF principal govt officer Musa Mabesa reported that the GEPF is financially sound and solvent and at the moment has a funding degree of 110.1% to satisfy its present profit obligations to members.
Mabesa mentioned because of this for every R100 owed to members, the GEPF has R110.10 out there to satisfy the fee.
He mentioned that is an enchancment from 2018 when the earlier statutory actuarial valuation report on the GEPF was accomplished, which mirrored a funding degree of 108.3%.
Contingency reserves
Mabesa added that the fund was in a position to arrange contingency reserves to cowl sudden occasions and unfavourable financial experiences of R186.8 billion.
He mentioned that on a conservative foundation, and if reasonably priced, the fund would have ideally arrange contingency reserves of R892.8 billion.
Mogajane mentioned that regardless of working in robust financial circumstances, the GEPF achieved a 9.6% year-on-year development, closing with a market (fund) worth of R2.3 trillion.
He mentioned this is a rise of R201 billion from the earlier monetary 12 months.
“This continued development of the fund, irrespective of the robust financial local weather that it operated in, clearly illustrates that the fund’s funding methods proceed to help in rising the fund.
“The improved return was largely as a result of positive domestic market conditions, especially equities growth, rising commodity prices and the performance of our bond portfolio, which improved by 6% from the previous financial year,” he added.
Read:
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The GEPF faces 5 pink flags [Dec 2020]
PIC hit by Covid-19 and state seize [Dec 2020]
Facts, figures and extra from the PIC’s annual report [Oct 2021]
GEPF funding portfolio grows 27.5% [Nov 2021]
The PIC’s interim board bows out with a whimper [Nov 2021]
Mogajane mentioned the fund efficiency exhibits a restoration in its unlisted and property portfolios, including the fund continues to strengthen its oversight and methods with respect to those portfolios to additional enhance their efficiency.
He mentioned it should nevertheless be famous that the long-term impression of the Covid-19 pandemic will proceed to hamper these portfolios.
The returns achieved by the GEPF from its investments in main asset lessons:
- Listed fairness elevated by 12%;
- Domestic bonds elevated by 6%;
- Domestic unlisted equities elevated by 19%; and
- Foreign collective investments schemes elevated by 6%.
Accumulated funds and reserves of the GEPF grew at a mean price of 8.6% throughout the 2013 to 2022 interval.
The fund’s funding portfolio elevated by 9.6% to R2.29 trillion at end-March 2022 from R2.09 trillion in 2021.
It attributed the rise within the funding worth largely to the economic system’s stability submit the Covid-19 impression on the economic system.
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During the reporting interval, the GEPF investments yielded a return of 11.1% in comparison with 23.1% in 2021, based mostly on web funding earnings of R255.70 billion in contrast with R483.84 billion in 2021.
The number of energetic members of the fund decreased by 0.3% to 1.261 million from 1.265 million within the prior 12 months however has remained steady over the previous 5 years.
Listen to Mabesa talking concerning the GEPF’s newest monetary efficiency:
