Absa takes over custody of GEPF’s R3.5 trillion

Absa has been appointed master custodian of the Government Employees Pension Fund (GEPF), taking over a mandate that Standard Bank has held since the Fund was established in 1996.

The appointment puts Absa in charge of the safekeeping and administration of the Fund’s investment assets, settlement of investment transactions, investment-related cash management, reporting, and custody co-ordination.

It does not mean Absa will manage the GEPF’s investments.

The GEPF has more than R3.5 trillion in assets, more than 1.2 million active members, and more than 565 000 pensioners and beneficiaries, according to Absa.

Its investments are managed by several asset managers, with the Public Investment Corporation (PIC) the largest.

So where does the custodian fit in?

What a master custodian does

The GEPF’s tender documents set out the scope of the custodian’s role.

The master custodian acts as the central operational link between the Fund and its appointed investment managers. Investment managers report transactions to the custodian, which settles trades, reconciles transactions, and records and reports the Fund’s assets.

The role goes considerably further than simply holding assets.

The tender requires the custodian to provide for the safekeeping and segregation of assets, settlement of transactions, cash management, corporate actions and income processing, asset pricing and valuation, accounting and reporting, performance and risk measurement, compliance monitoring, and technology systems.

It must also maintain appropriate backup systems and a tested business-continuity plan, with independent assurance of those arrangements. The custodian may not pledge, dispose of, or otherwise encumber investment assets except under the direction of the GEPF or its authorised asset managers.

The scale of the operation gives some context for why this is a specialist function.

As at 31 March 2024, the GEPF said it had approximately 50 asset managers, 40 custody accounts, and 45 bank accounts. About 90% of its assets were held in segregated mandates, while the Fund was invested in approximately 40 pooled funds. The PIC managed 78% of the assets, with the remainder managed by external asset managers.

The Fund’s portfolio also extends beyond South African listed shares and bonds. The tender describes investments in equities, bonds, property, and private assets across Africa, North America, South America, Europe, and Asia.

The custodian must bring together transactions, asset records, cash, valuations, and reporting from a range of investment mandates and managers.

The tender also requires real-time access to portfolio data, complete histories of investment activity, and electronic data feeds between the GEPF, its consultants, and investment managers.

Absa replaces Standard Bank

Absa’s appointment follows a competitive procurement process and ends Standard Bank’s roughly 30-year tenure as the GEPF’s custodian.

Business Day reported that Standard Bank had held the mandate since the GEPF’s establishment in 1996, and its role was expanded in 2015 to include investment reporting.

The GEPF’s 2025 tender sought a master custodian for an initial five-year period, with possible extensions of two years and one year.

Absa says its broader transactional banking relationship with the GEPF dates to 2001. Its existing services, including cheque deposit processing and electronic banking solutions, will continue alongside the new custody mandate.

Standard Bank said the GEPF remains a valued client. Client confidentiality and contractual obligations meant Standard Bank could not comment on whether it participated in the tender process, the specific services it provided to the GEPF, or the details of its past or current mandates.

What does it mean for GEPF members?

For GEPF members and pensioners, there should be little change to their day-to-day interaction with the Fund.

Absa says the appointment is primarily an institutional and operational change and does not directly affect the daily experience of members or pension beneficiaries.

It does not change members’ pension benefits or give Absa responsibility for deciding how the Fund’s portfolio is invested. The PIC and other appointed investment managers remain responsible for managing the underlying investments.

What changes is the institution responsible for the custody infrastructure supporting those investments. That includes settling transactions, reconciling asset and cash positions, maintaining records, processing income and corporate actions, monitoring compliance with investment mandates, and producing accounting and performance information for the Fund.

Much of this work happens out of sight of members, but the GEPF’s tender requirements show the breadth of the responsibility.

The technology requirements are similarly extensive. The custodian must provide secure, real-time access to portfolio information, maintain complete investment histories, and protect GEPF data against unauthorised access.

The tender also requires support for unlisted investments, including private equity, private debt and investment property, as well as performance and risk reporting across these assets.

Absa’s group head of investor services, Mosetsana Mahlafunya, said much of the custodian’s work happens “behind the scenes”, while contributing to the operational integrity that enables the Fund and its stakeholders to make informed decisions.

Absa’s sector head: public sector (client coverage), Francinah Madise, said the responsibility was ultimately about supporting the long-term financial security of the Fund’s public-sector members, pensioners, and their families.