The country’s biggest and most important pension fund is healthy, but there are some reasons to be concerned.

The extraordinary rise in the value of the JSE between March 2020 and March 2021 stemmed three years of declining values within the Government Employees’ Pension Fund (GEPF) and has placed it in a sound financial position as far as short-term commitments are concerned.

However, it is unlikely that investors will see another year where the JSE rises by 55%, which makes the long-term soundness of the fund even more important.

According to an independent actuarial valuation of the fund’s value, assets of R2.042-billion covered excess liabilities of R1.868-billion, meaning that as of 31 March 2021, short-term liabilities were covered by 110%. This is up from 108% in 2018, when the last actuarial valuation was performed.

According to the actuaries who prepared the report, African Origins Actuarial Solutions, peer reviewed by Alexander Forbes Financial Services, this means that the fund was financially sound on the minimum funding basis at the valuation date. The trustees’ targeted minimum funding level is 90%.

This is particularly pleasing, and given that the JSE has risen by another 13% between March 2021 and March 2022 to reach 75,907, suggests the fund has in all likelihood advanced further.

Read more @Daily Maverick