More than 31 000 annuitants of the Government Institutions Pension Fund (GIPF) received good news yesterday when the fund confirmed that its board of trustees approved a pension increase of seven percent for the 2016/17 financial year.
The increase, effective as of April 1, is above the inflation rate that has been largely flat in 2015, at just above three percent, although there was a sharp inflationary increase during February 2016 (6.1 percent).
“The decision followed a thorough consideration of all variables, including investment returns and risk on one hand and the consumer price index (CPI) on the other, given our policy to target inflation-linked pension increases…
“In our view the price of the food basket will continue to worsen and our pensioners expect more difficulties due to the imminent drought and lower agricultural production,” said David Nuyoma, GIPF’s chief executive officer.
The Fund’s pension payroll continues to grow. At the end of February this year it paid out over N$2.2 billion in pension benefits. Nuyoma, however, admitted the decision to increase pensions for its retired members was not an easy one against the backdrop of meagre investment returns recorded for the year.
“The world markets declined during 2015, affecting everyone else and GIPF was not spared, but we take solace in the fact that our average return over the past five years has been around 16 percent and this is considered to be exceptional for a Fund to grant an annual average pension increase of 7.1 percent during the past ten years,” Nuyoma said.
He added that despite global financial hardships the GIPF remains in a sound financial position, with the asset-to-liability ratio now standing at 108 percent, according to GIPF’s recent Actuarial Valuation Report.
“Trustees and management of the Fund will continue to innovate on investment strategies that would ensure stability and long-term commitment to our obligations,” Nuyoma concluded.