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News24 reports that with an average decline of 15% in actuarial interest values from 1 October, members of the Government Employees Pension Fund (GEPF) could see a decline in their savings pot.
The GEPF has temporarily suspended any application for a withdrawal from the savings pot from 7 to 21 October. This is to enable the fund to update its systems with the recently implemented actuarial factors used to calculate member benefits, effective from 1 October. The update of actuarial factors will impact the amount available for withdrawal, as the latest actuarial interest values are, on average, 15% lower than those last calculated in 2021. The extent to which individual members’ actuarial interest will differ between the 2021 and 2024 factors depends on their age and category – for example, whether they are uniformed service members.
The GEPF is a defined-benefit fund, and, as such, actuarial interest factors are used to express a member’s earned future pension as a present-day lump sum rand amount. Interestingly, higher real expected future returns reduce the actuarial interest. According to the GEPF, updating factors is essential for fairness. If the fund continued to use older, higher factors after the outlook improved, members who resigned or withdrew would be overpaid relative to their fair share. In a pooled defined-benefit arrangement, that overpayment would be subsidised by those who remained to retirement. The reverse is true for a decrease in the net discount rate. In the coming weeks, the GEPF will advise on when members will be able to view updated benefit statements reflecting benefit entitlements using the 2024 factors.
- Read the full original of the report in the above regard by Maya Fisher-French at News24 (subscription / trial registration required)
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