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JIMMY MOYAHA: The Government Employees Pension Fund
[GEPF], the pension fund that is responsible for the pensions and funds
of almost 1.8 million South Africans – 1.2 million or so active members
as well as 560-odd thousand pensioners – released its annual report for
the financial year ended 31st March 2025.
I’m joined on the line by GEPF principal executive officer Musa Mabesa to take a look at this and see what we make of it.
Listen: Delays and risky investments: GEPF defends finances
Dr Mabesa – I’m putting that into existence. Thank you so much for
taking the time to join us. Your initial thoughts and reflections around
the year that was for the fund? A very good year, if we’re looking at
the numbers and the performance, to have a portfolio size that is now
just shy of R2.7 trillion. When we spoke last year it was around the R2.3 trillion mark. So quite a good year.
MUSA MABESA: Good evening Jimmy and thank you very much for having me. Yes it’s Mr Musa Mabesa, not ‘doctor’.
JIMMY MOYAHA: I was putting it out there in advance.
MUSA MABESA: [Chuckling] Thank you, Jimmy. Once it’s done, we’ll communicate it.
Well, Jimmy, it’s been a good year for the GEPF and I think for the local markets as well.
We grew by 13.1% from last year’s closing assets under management, or
AuM. We’ve also seen positive returns at 14.1% for the year ended 31st
March 2025. So the GEPF is happy with the performance of its
investments.
JIMMY MOYAHA: Musa, I want to take a look at some
movements throughout the year. There was obviously the cybersecurity
breach in this financial year that we are referring to that affected the
business. Take us through the impact that had on the fund but, more
importantly, the recovery that came from that.
MUSA MABESA: Yes, Jimmy. The cybersecurity attack
was on our benefits administration system. The administrators themselves
did not breach the benefits system itself, but its supporting systems
around it.
But the impact was that it delayed the processing of payments as we
were trying to recover our systems and ensure that we safeguarded the
integrity of our systems.
So that was the impact of that cybersecurity attack in February and
March last year. But we’ve since found ways to cover our systems to
prevent future attacks to the extent that we can.
JIMMY MOYAHA: Speaking of payments, can we take a
look at the two-pot [pension fund system] for this year or the impact
that two-pot withdrawals have had over the last financial year? When you
and I initially spoke, we had just rolled out two-pot sort of late last
year. We’ve kind of come through a full cycle of that. Can you perhaps
just take us through how you’re seeing that from a pensions point of
view?
Read:
One year into the two-pot system: Lessons from the frontline
Two-pot withdrawal repeat claims surge
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MUSA MABESA: We paid around R14.3 billion from
September last year when two-pot was introduced until March 2025, our
year-end, and that was on average around 691 000 withdrawal applications
that we had received – and we paid 565 000 of those claims.
So we did see a significant uptake on these two-pot withdrawals, with an average claim of around R23 500.
What this tells us is that most of these members withdrew from the
R30 000 initial allowance at the time of the introduction of two-pot.
We’ve seen these numbers slow post April 2025 and we’re hopeful that
members, once they get used to the savings culture and the new
arrangement, will be more comfortable withdrawing only when there is a
need.
Listen/read: Two-pot withdrawals: Where was the money spent?
JIMMY MOYAHA: Well, we could tell them that the GEPF
has R6 billion in a reserve account as part of a savings culture. I
think that would encourage a lot of savings. It’s very impressive to see
that the pension fund is able to still manage its finances and balance
its portfolio.
I want to look at that portfolio, Musa, in a bit more detail. An
almost 86% exposure to South Africa, in particular across equities,
across bonds, across cash, all manner of investments. You and I have
spoken about this in the past, about concentration risk and how you’re
navigating that.
But at the moment, given that some of the best-performing stocks that
contributed towards the portfolio were the likes of Gold Fields and
AngloGold, it’s not such a bad thing to be invested in a country that
you ultimately believe in.
MUSA MABESA: Indeed. We strive to have around 80% of
our assets in SA, with the balance being invested outside South Africa –
up to 5% as a continent and 15% offshore.
We may not have maximised that, understanding the size of the fund,
but I think we need to remind our listeners the GEPF’s liabilities are
rand-based, so it makes sense for the GEPF to also have some of its
assets in rands, so that at the point we need to liquidate the
liquidating rands there’s no currency exposure risk, and we’re able to
pay your benefits accordingly.
We will over time be increasing to make sure we maximise up to the
20% outside of South Africa so that we take advantage of the
diversification and benefits in other jurisdictions.
JIMMY MOYAHA: Musa, can we take a look at the
developments unfolding at the Public Investment Corporation, the PIC? I
bring them up because the PIC, as we’ve discussed in the past on the
show, manages 82% or so of the GEPF’s finances – or portfolio, rather –
and we’ve seen a couple of developments coming out of the PIC, some
concerns around some deals that have been made, concerns that even the
PIC chief executive has flagged, and the fact that we are still dealing
with a suspended chief investment officer.
Listen/read: PIC assets under management hit record high [Oct 2024]
These ordinarily might not be too concerning, but given the position
of the GEPF and given the amount of money that sits within the PIC, I
want to get your thoughts on that.
MUSA MABESA: Look, I think, Jimmy, the noise around
what may be happening is concerning, but we have full faith in the new
board as well as the new CEO.
Again, these are allegations and we should respect that. They remain
allegations until proven otherwise. So we remain focused on making sure
we manage our relationship with the PIC through the investment mandate.
We’ve given them the results. We spoke about the good performance of our
assets.
It’s all thanks to the PIC to a large extent, because they are managing those assets.
So they continue to manage our assets, barring some of the negative
coverage that they’ve received. But we have full faith in them that they
will attend to those matters while we monitor and ensure the
performance of our investments.
JIMMY MOYAHA: Musa, just as an aside while we are on
that topic, does the GEPF have alternative arrangements in place in the
event that something should happen with the PIC? I know we’ve spoken
about this before, saying it’s unlikely that something will happen,
given the size and the experience that sits within the PIC.
Just from a preparedness perspective, is this something that the GEPF has to consider?
MUSA MABESA: Jimmy, we look at our risks
holistically, also appreciating that 80% of our portfolio is passively
managed. So that’s a risk that can easily be managed.
If that prospect should come to life, what we should also remember is that the PIC has appointed
other managers – in excess of 25 – to assist in the management of our
portfolio. So it would not be a difficult thing to try and manage
ourselves out of such a challenge.
But we are hopeful that the systems that we have in place and the
controls that the PIC has in their own institution will safeguard us
from such an eventuality.
JIMMY MOYAHA: Well, given that the Public Investment
Corporation has been around for more than 110 years since 1911, we can
safely assume that they’ll still be around for a lot longer.
Musa, before I let you go, I want to take a look at the
infrastructure conversations that have been developing of late. You
touched on the fact that it is important to be invested in the local
environment, in the local economy, and as to that I want to look at the
announcement made last week by the minister of the National Treasury
around the infrastructure bond that we’re looking to introduce into
South African markets, ring-fencing funds specifically for
infrastructure development.
Read:
Top Africa money manager sees private capital fixing funding gap
PIC seeks sovereign fund partners
Is there something that we could perhaps see the GEPF looking to get
involved in? Infrastructure forms the cornerstone of development of an
economy – and what better way to do it than through something like an
infrastructure bond?
MUSA MABESA: Indeed, Jimmy. We appreciate that
infrastructure, like you’ve just mentioned, is an important asset class
for us and the country.
For the GEPF to continue to exist, the economy of South
Africa needs to be performing. So we will look into this through the PIC
on the infrastructure bond.
I’m hopeful that through the return aspirations of the fund and the
PIC also managing those expectations, we should be able to find
expression in that new scheme. We can’t stay away from investing in
infrastructure that will keep the South African economy going.
Read: Ramaphosa targets R3trn private sector infrastructure boom
So I’m certain that through the mechanisms that the PIC has and
discussions with National Treasury we should be able to participate like
we’ve done based on our other bond holdings, which are for government
in excess of 23%, excluding SOEs [state-owned enterprises].
So I’m confident that the GEPF, subject to meeting the return expectations, should be able to participate in that.
JIMMY MOYAHA: A fund heading towards the R3 trillion
mark, a fund that is doing well and has had an exceptional year. We’ll
leave the conversation on that note.
Thank you so much to the principal executive officer at the GEPF,
Musa Mabesa, for joining us to take a look at the performance of the
GEPF over the last financial year.
Just a side note on that. The reason I put it out that it would be
potentially Dr Musa soon enough is that the principal officer, has a
master’s degree from the University of London and usually these are
followed by PhDs. So Musa, we’ll see how that works.
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