GIPF sets aside N$26bn cushion

Pension fund takes a long view

29 April 2020 | Economics



The Government Institutions Pension Fund (GIPF) has put aside close to N$26 billion to ensure that it has adequate resources available to pay out to its members despite the havoc the coronavirus pandemic is causing in stock markets.

CEO David Nuyoma said this was done to ensure that the GIPF would be able to meet its obligations when required.

“Adequate assets and risk reserves totalling some N$25.9 billion have been put aside to ensure that the liabilities are not understated, and that the Fund can pay the promised benefits as they fall due. These reserves provide the necessary cushion in times such as these,” Nuyoma said.

The other saving grace for the fund was that a proportion of its liabilities did not have to be settled within this period.

Long term

“Our liabilities are long-term in nature, with the average civil servant still having 14 years to retirement. Pensioners continue to draw pensions long after they retire, with some pensioners on our books well into their 80s,” Nuyoma said.

He added that no rushed decisions would be made regarding any of its investments.

“As a long-term investor, GIPF will not make any rushed investment decisions in light of this pandemic. We continue monitoring the markets and will take any other necessary mitigating actions as and when it becomes necessary,” Nuyoma said.

Too soon

The fund admitted that it was still too early to determine what the full impact would be on its investments in the long term.

“It is quite early in assessing the full impact that coronavirus will have on economies locally and aboard in the long term. The markets we are invested in have all seen the impact of Covid-19 through prices of instruments being marked down, with especially international investors retreating to safe-haven markets and instruments during this time,” Nuyoma said.

According to Nuyoma, the GIPF’s investments that were impacted by the pandemic would recover over time.

“We are mindful of the fact that despite markets having repriced like they did, our liability remains long-dated, and is not all payable now. This allows for these assets to, over time, recover and again reflect fair value.

“We have seen large international economies announcing support packages, and some of the proceeds of that will find its way to markets we are invested in, and assist in the recovery of markets overall,” he said.