When pension issues are reported on in the media, it is likely to be alarmist.
True to form, the latest reports on the actuarial valuation of the GEPF and the ANC’s Manifesto vision of introducing prescribed investments for pension funds did just that.
According to one report a recent actuarial valuation of the GEPF indicates that in the long term the funding level of the fund could drop below the desired level. No indication is given on what “long term” constitutes, nor does it give much attention to the fact that the GEPF is currently 108% funded. What is also completely ignored in the equation is that the GEPF is a defined benefit fund that guarantees members’ pension benefits.
The possible drop in the long term funding level of the GEPF could potentially be mitigated if the investment of the GEPF’s funds yielded solid returns. It is believed that the investigation currently under way into the Public Investment Corporation (PIC) will have positive spin offs in that the rot in the Corporation will have been exposed and dealt with, that a new Board of knowledgeable persons will be appointed and that the PIC’s investments will in future be put under serious scrutiny.
Even with all the problems that have beset the PIC, it still managed to achieve returns on investments that were above inflation.
As for the ANC’s manifesto vision of introducing prescribed investments for pension funds, it is just that – a vision. There are no details as to how it will work, if ever it becomes a reality. At this stage it can be nothing but speculation.