The Government Institutions Pension Fund (GIPF) has increased its asset base by 25% for the year ended 31 March 2021 from N$109.3 billion to N$136.2 billion. This is according to the condensed annual financial statements for the year under review which were released last week, and showed that the asset base rebounded significantly from a decrease of N$118.1 billion to N$109.3 billion in the prior year. Also, during the period under review, the benefits paid out by the Fund to its members and beneficiaries increased by 5% to N$5.15 billion from N$4.92 billion.
The latest figures further show that the GIPF is currently valued at N$135.5 billion, compared to the N$108.5 billion of 2020.
The GIPF noted that its core business is to ensure that pension and related benefits are paid once they mature, and that income in the form of members’ contributions is invested wisely to generate adequate returns. “As a defined benefit pension fund, the GIPF provides guaranteed benefits to its members as defined by the rules of the fund. Therefore, sufficient assets are needed to cover the payment of liabilities that stretch far into the future,” reads the statement.
The fund has a liability-driven strategy comprising a robust Asset Liability Modelling (ALM) process. The ALM feeds into the risk and return parameters known as the Strategic Asset Allocation (SAA), which the GIPF as a long-term investor uses to implement its investment philosophy.
The ALM process allows the fund to adapt to prevailing economic market conditions, relative to its liabilities, and factors in variables that will ensure the GIPF does not only safeguard the assets of the fund, but also grows them through investing in return-seeking investment opportunities.
Furthermore, the GIPF stated that adequate assets and risk reserves have been put aside to ensure liabilities are not understated, and that the fund can pay the promised benefits as they become due.
Meanwhile, member contributions to the fund increased to N$4.46 billion from N$4.35 billion, while the Fund’s active membership declined to 101 027 from 101 762 members.