Today's Labour News

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GEPFBL Premium reports that the Government Employees Pension Fund (GEPF), which looks after R2-trillion on behalf of government workers, may shift hundreds of billions of rand offshore as it seeks to reduce its dependence on the local market.  

Principal officer Abel Sithole said this week:  "The biggest change we want to realise is to be more diversified," while the primary reason would be to look for returns uncorrelated to the fortunes of the country.  The fund hopes to put in place a new strategic asset allocation framework in coming months.  While large-scale selling by an investor accounting for about 18% of the JSE could destabilise the market, for workers, and taxpayers who back their pensions, diversification could boost returns and offer a level of protection from a local market that has been hit by a shrinking economy.  Under current regulations, pension funds can invest as much as 30% of their portfolio directly offshore, with a further 10% for investment in the rest of Africa.  Thus as much as 40% of a pension fund can be invested outside SA.  Less than 10% of the GEPF assets are invested outside the country.  An increase from a 10% to a 40% allocation could see as much as R600bn looking for new pastures, equating to almost 13% of SA’s GDP.  The fund was consulting with the government, Sithole indicated.  Dennis George of Fedusa, one of the largest union federations representing government employees, said they hadn’t yet been consulted on the new strategy.  But, understood the argument for diversifying away from the JSE.

  • Read this report by Warren Thompson in full at BL Premium (paywall access)

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