An actuarial valuator says that the Government Institutions Pension Fund (GIPF) is financially stable and able to meet its obligations in the near future despite the challenges posed by Covid-19.
Mr. Faniel Kisting, the chairperson of the Audit and Risk Committee at GIPF, said this at the launch of the GIPF Actuarial Report on 24 June 2022. The report covers the period 1 April 2018 to 31 March 2021.
“A key reason for conducting this assessment, is that the fund valuator or actuary provides an added assurance to the Board, employers as well as to the members of the scheme that the scheme is being administered in accordance with the requirement of the Pension Fund`s Act and contributions and investment returns are sufficient to pay promised benefits in full over the long-term,” Kisting said.
“The actuarial valuation is for the period 01 April 2018 to 31 March 2021, a time during which Covid-19 was prevalent and caused devastation to many economies around the world.
“Many employees lost their jobs causing an acceleration of early retirement applications and large outflows from pension funds while some pension funds also experienced a decrease in contribution revenues.
“Mortality rates also went up disproportionately resulting in increases in claims for death and funeral benefits. Covid-19 also adversely impacted Financial Markets around the world, causing a decline in investment returns and a decline in asset values of Funds.
“The combined impact of the aforementioned factors had a negative impact on the solvency and sustainability of pension funds in general.
“The GIPF Pension Fund was not immune to the abovementioned impact of Covid-19 and without going into the detailed findings and recommendations of the actuary, the Board of trustees noted that the benefits paid to members and beneficiaries exceeds the contributions received and that this aspect might influence the future sustainability of the Fund.
“This is due to the increase in the number of pensioners as the Fund continues to mature. The Board of Trustees has put sufficient measures in place to ensure the sustainability of the Fund by adopting appropriate investment strategies to ensure that there is a right balance between cash availability to pay for benefits and maximising investment returns to cover contribution shortfall.”
In addition, Kisting stated, the Fund has managed to build a sufficient war chest in case of such future events through setting aside sufficient contingent reserves which amounts to N$21.4 billion on 31 March 2021.
“Included in these reserves is a longevity reserve that would cover the risk that pensioners live longer than expected, an Employer Contribution Reserve covering for contribution shortfalls, a Data Reserve and a Mortality Reserve.
“In addition to the above strategies, the Board of Trustees ensured that an efficient governance structure is in place coupled with proper policies to ensure operational efficiency. The policies include proper Funding and pension Increase Policies as well as policies covering benefit payments and are reviewed periodically.
“The Board of Trustees is confident that the above measures together with our competent management team will ensure that the Fund remains sustainable in the future and the future prospect of the Fund remains positive.”
In the photo: Mr Faniel Kisting.