Windhoek-More than 35 000 annuitants of the Government Institutions Pension Fund (GIPF) will receive a seven percent increase on their pensions as of April 01, after this percentage was approved by the institution’s Board of Trustees. The decision was based, amongst numerous factors, on the GIPF’s average annual returns on its investments of 15 percent, which are well above inflation, during the last five years. The Fund’s pension increases for the last five years have been 7.5 percent (2012), 6.5 percent (2013), 7.5 percent (2014), 6.5 percent (2015) and 7 percent in 2016.
“The Board of Trustees normally targets inflation-linked pension increases, however other factors which influence the annual pension increase include the performance of the Fund over the financial year, historical pension increases and the Consumer Price Index (CPI), which is used as a baseline to determine the shift in the prices of basic commodities,” explained GIPF’s acting GM: marketing and stakeholder engagement, Daylight Ekandjo. She noted that after careful consideration of these factors, as well as the fact that year-on-year inflation was recorded at 6.5 percent as at March 31 2016, the Board found the seven percent increase “suitable and affordable” for the Fund.
The number of annuitants at GIPF, which includes pensioners and other beneficiaries, currently stands at 35 194, with the Fund paying close to N$3 billion in benefits to its members annually, of which over N$1.2 billion is paid to pensioners.
According to Ekandjo, this latest increase is well within the Fund’s affordability margin and will not have any adverse financial implications for the institution. However, she cautioned that the sharp decline in returns over the last three years needs to be noted in conjunction with effects on potential increases over the long term, should the trend persist.
“Despite the market volatility being experienced globally, we are proud to announce that the Fund remains fully funded with over 108 percent ratio of assets to liabilities with an asset value of N$98 billion.
GIPF remains in a sound financial position to afford such a benefit to its pensioners and this is also in line with the Fund’s strategy to protect pensioners’ income from the erosion of the purchasing power of their income,” Ekandjo added. She concluded that the Fund will continue to guard and grow their benefits and will always strive to review member benefits in line with market developments.