Annual pension increases were among the issues raised when the Government Employees Pension Fund (GEPF) briefed the National Council of Provinces’ Select Committee on Finance on 26 May 2026, with MPs querying the calculation method amid dissatisfaction among some pensioners about the level of increases.
The GEPF, which is Africa’s largest retirement fund, manages pensions and related benefits for more than 1.267 million active members and over 565 221 pensioners and beneficiaries.
GEPF board chairperson Frans Baleni told the committee the Fund remained financially strong, while principal executive officer Musa Mabesa and head of investments Sifiso Sibiya said pension increases are determined through a CPI-linked, formula-based actuarial process set out in law and Fund policy.
Mabesa acknowledged that some pensioners were dissatisfied with the level of increases and said the issue often turns on how the Fund explains the trade-offs behind the annual outcome.
He said increases are set through an actuarial process anchored in the Government Employees Pension Law and the Fund’s pension increase policy, with modelling of long-term liabilities against projected asset growth, inflation dynamics, and sustainability thresholds. He said an independent actuarial valuator makes recommendations, which are considered through governance structures and approved by the board of trustees.
Sibiya described the process as formula-based and long-horizon, involving an assessment of liability growth over time against the expected growth and performance of the investment portfolio, rather than a short-term or discretionary approach.
He also linked the outcome to the inflation measure used in the determination period, noting that lower CPI outcomes feed through into lower pension increases under an inflation-linked framework.
The Fund’s published pension-increase guidance sets out the baseline more explicitly: it states that, under the GEP Law, the GEPF’s aim is to grant annual increases on 1 April equal to at least 75% of the year-on-year CPI increase to the previous 30 November, plus any additional amount needed to maintain the purchasing power of at least 75% of the pension at retirement. The same guidance notes that increases above what the law provides are at the board’s discretion and subject to affordability, and pensioners who retired after the previous 1 April receive a pro-rated increase.
Recent media reports have highlighted why the CPI reference point can become contentious. News24 reported that the GEPF announced a 3.5% annual pension increase effective 1 April 2026, describing it as 100% of the inflation rate for the 12 months ending 30 November 2025, and noted the pro-rating approach for pensioners who retired after the prior April cut-off date. The same report observed that year-on-year November CPI can differ from average inflation during the year, which can shape pensioner perceptions of whether the increase matches their cost-of-living experience.
Mabesa reported that the Fund’s assets had grown from R127 billion in 1996 to R2.69 trillion by March 2025. The Fund surpassed the R3-trillion mark during the 2025/26 financial year, although the figure remained subject to audit.
He noted that the funding level remained above 100%, currently standing at 119%, reflecting a strong solvency position.
The Fund paid about R167bn in benefits during the 2024/25 financial year. Investment income for the year amounted to nearly R380bn, representing a return of 14.1%.
PIC oversight and unlisted investments
MPs also asked questions about the Fund’s investment governance, specifically how the GEPF oversees the Public Investment Corporation (PIC), which manages most of the Fund’s assets under an investment management agreement.
MPs questioned what mechanisms exist to hold the PIC accountable for investment decisions and how consequences follow where governance failures or poor outcomes occur, with a particular focus on the unlisted portfolio.
Baleni told the committee the Fund’s investment concerns were concentrated in a small portion of the portfolio, stating that about 96% was performing strongly and that the key concerns sit in the remaining 4%, mainly linked to unlisted investments. He said the Fund has introduced accountability measures against the PIC and that legal processes remain available where negligence or misconduct is identified.
Mabesa said the GEPF has strengthened oversight of the PIC through revised investment management arrangements, oversight structures, and tighter monitoring. The GEPF also reported that it had imposed a moratorium on unlisted property investments while structural and governance weaknesses in that area are addressed.
MPs raised Daybreak Foods as a specific example of concern linked to PIC-managed investments and asked what steps the GEPF had taken to protect its investment and recover value, including whether legal action against the PIC would be pursued.
Baleni told the committee the GEPF, alongside the Compensation Fund and the Unemployment Insurance Fund, held equal shareholding positions in Daybreak Foods, and said investigations had identified governance failures and wrongdoing, with accountability processes involving the PIC under way.
He added that further exposure had been constrained through tighter funding controls and that shareholders were receiving structured reporting on developments.
Media coverage has continued to focus on losses and governance risks in unlisted exposures. Daily Investor reported in November 2025 that the Fund’s 2024/25 reporting disclosed R3.6bn in write-offs across various investments (including Daybreak Foods and Independent Media), and it argued that unlisted investments tend to be less transparent than listed holdings.
Benefit administration
MPs also raised concerns about delayed benefit payments, unresolved complaints, and unclaimed benefits.
Mabesa said the GEPF’s operating model outsources benefits administration to the Government Pensions Administration Agency (GPAA) under an administration agreement and service-level arrangement.
On payment timelines, Mabesa reported that 58% of benefits were processed within 60 days from the date of exit, while 85% were processed within 60 days after receipt of complete documentation, attributing delays mainly to incomplete or late documentation, verification issues, and beneficiary tracing.
Mabesa said unclaimed benefits amounted to about R513 million, not R530bn, as one MP suggested.
The committee discussion also touched on the impact of the two-pot retirement system, with MPs referencing the scale of withdrawals as an indicator of member financial pressure.
Mabesa reported that the Fund had received 691 000 withdrawal applications, of which 564 547 have been paid.
