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JIMMY MOYAHA: The Government Employees Pension Fund [GEPF], the pension fund that is responsible for the pensions and funds of almost 1.8 million South Africans – 1.2 million or so active members as well as 560-odd thousand pensioners – released its annual report for the financial year ended 31st March 2025.

I’m joined on the line by GEPF principal executive officer Musa Mabesa to take a look at this and see what we make of it.

Listen: Delays and risky investments: GEPF defends finances

Dr Mabesa – I’m putting that into existence. Thank you so much for taking the time to join us. Your initial thoughts and reflections around the year that was for the fund? A very good year, if we’re looking at the numbers and the performance, to have a portfolio size that is now just shy of R2.7 trillion. When we spoke last year it was around the R2.3 trillion mark. So quite a good year.

MUSA MABESA: Good evening Jimmy and thank you very much for having me. Yes it’s Mr Musa Mabesa, not ‘doctor’.

JIMMY MOYAHA: I was putting it out there in advance.

MUSA MABESA: [Chuckling] Thank you, Jimmy. Once it’s done, we’ll communicate it.

Well, Jimmy, it’s been a good year for the GEPF and I think for the local markets as well.

We grew by 13.1% from last year’s closing assets under management, or AuM. We’ve also seen positive returns at 14.1% for the year ended 31st March 2025. So the GEPF is happy with the performance of its investments.

JIMMY MOYAHA: Musa, I want to take a look at some movements throughout the year. There was obviously the cybersecurity breach in this financial year that we are referring to that affected the business. Take us through the impact that had on the fund but, more importantly, the recovery that came from that.

MUSA MABESA: Yes, Jimmy. The cybersecurity attack was on our benefits administration system. The administrators themselves did not breach the benefits system itself, but its supporting systems around it.

But the impact was that it delayed the processing of payments as we were trying to recover our systems and ensure that we safeguarded the integrity of our systems.

So that was the impact of that cybersecurity attack in February and March last year. But we’ve since found ways to cover our systems to prevent future attacks to the extent that we can.

JIMMY MOYAHA: Speaking of payments, can we take a look at the two-pot [pension fund system] for this year or the impact that two-pot withdrawals have had over the last financial year? When you and I initially spoke, we had just rolled out two-pot sort of late last year. We’ve kind of come through a full cycle of that. Can you perhaps just take us through how you’re seeing that from a pensions point of view?

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MUSA MABESA: We paid around R14.3 billion from September last year when two-pot was introduced until March 2025, our year-end, and that was on average around 691 000 withdrawal applications that we had received – and we paid 565 000 of those claims.

So we did see a significant uptake on these two-pot withdrawals, with an average claim of around R23 500.

What this tells us is that most of these members withdrew from the R30 000 initial allowance at the time of the introduction of two-pot. We’ve seen these numbers slow post April 2025 and we’re hopeful that members, once they get used to the savings culture and the new arrangement, will be more comfortable withdrawing only when there is a need.

Listen/read: Two-pot withdrawals: Where was the money spent?

JIMMY MOYAHA: Well, we could tell them that the GEPF has R6 billion in a reserve account as part of a savings culture. I think that would encourage a lot of savings. It’s very impressive to see that the pension fund is able to still manage its finances and balance its portfolio.

I want to look at that portfolio, Musa, in a bit more detail. An almost 86% exposure to South Africa, in particular across equities, across bonds, across cash, all manner of investments. You and I have spoken about this in the past, about concentration risk and how you’re navigating that.

But at the moment, given that some of the best-performing stocks that contributed towards the portfolio were the likes of Gold Fields and AngloGold, it’s not such a bad thing to be invested in a country that you ultimately believe in.

MUSA MABESA: Indeed. We strive to have around 80% of our assets in SA, with the balance being invested outside South Africa – up to 5% as a continent and 15% offshore.

We may not have maximised that, understanding the size of the fund, but I think we need to remind our listeners the GEPF’s liabilities are rand-based, so it makes sense for the GEPF to also have some of its assets in rands, so that at the point we need to liquidate the liquidating rands there’s no currency exposure risk, and we’re able to pay your benefits accordingly.

We will over time be increasing to make sure we maximise up to the 20% outside of South Africa so that we take advantage of the diversification and benefits in other jurisdictions.

JIMMY MOYAHA: Musa, can we take a look at the developments unfolding at the Public Investment Corporation, the PIC? I bring them up because the PIC, as we’ve discussed in the past on the show, manages 82% or so of the GEPF’s finances – or portfolio, rather – and we’ve seen a couple of developments coming out of the PIC, some concerns around some deals that have been made, concerns that even the PIC chief executive has flagged, and the fact that we are still dealing with a suspended chief investment officer.

Listen/read: PIC assets under management hit record high [Oct 2024]

These ordinarily might not be too concerning, but given the position of the GEPF and given the amount of money that sits within the PIC, I want to get your thoughts on that.

MUSA MABESA: Look, I think, Jimmy, the noise around what may be happening is concerning, but we have full faith in the new board as well as the new CEO.

Again, these are allegations and we should respect that. They remain allegations until proven otherwise. So we remain focused on making sure we manage our relationship with the PIC through the investment mandate. We’ve given them the results. We spoke about the good performance of our assets.

It’s all thanks to the PIC to a large extent, because they are managing those assets.

So they continue to manage our assets, barring some of the negative coverage that they’ve received. But we have full faith in them that they will attend to those matters while we monitor and ensure the performance of our investments.

JIMMY MOYAHA: Musa, just as an aside while we are on that topic, does the GEPF have alternative arrangements in place in the event that something should happen with the PIC? I know we’ve spoken about this before, saying it’s unlikely that something will happen, given the size and the experience that sits within the PIC.

Just from a preparedness perspective, is this something that the GEPF has to consider?

MUSA MABESA: Jimmy, we look at our risks holistically, also appreciating that 80% of our portfolio is passively managed. So that’s a risk that can easily be managed.

If that prospect should come to life, what we should also remember is that the PIC has appointed other managers – in excess of 25 – to assist in the management of our portfolio. So it would not be a difficult thing to try and manage ourselves out of such a challenge.

But we are hopeful that the systems that we have in place and the controls that the PIC has in their own institution will safeguard us from such an eventuality.

JIMMY MOYAHA: Well, given that the Public Investment Corporation has been around for more than 110 years since 1911, we can safely assume that they’ll still be around for a lot longer.

Musa, before I let you go, I want to take a look at the infrastructure conversations that have been developing of late. You touched on the fact that it is important to be invested in the local environment, in the local economy, and as to that I want to look at the announcement made last week by the minister of the National Treasury around the infrastructure bond that we’re looking to introduce into South African markets, ring-fencing funds specifically for infrastructure development.

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Is there something that we could perhaps see the GEPF looking to get involved in? Infrastructure forms the cornerstone of development of an economy – and what better way to do it than through something like an infrastructure bond?

MUSA MABESA: Indeed, Jimmy. We appreciate that infrastructure, like you’ve just mentioned, is an important asset class for us and the country.

For the GEPF to continue to exist, the economy of South Africa needs to be performing. So we will look into this through the PIC on the infrastructure bond.

I’m hopeful that through the return aspirations of the fund and the PIC also managing those expectations, we should be able to find expression in that new scheme. We can’t stay away from investing in infrastructure that will keep the South African economy going.

Read: Ramaphosa targets R3trn private sector infrastructure boom

So I’m certain that through the mechanisms that the PIC has and discussions with National Treasury we should be able to participate like we’ve done based on our other bond holdings, which are for government in excess of 23%, excluding SOEs [state-owned enterprises].

So I’m confident that the GEPF, subject to meeting the return expectations, should be able to participate in that.

JIMMY MOYAHA: A fund heading towards the R3 trillion mark, a fund that is doing well and has had an exceptional year. We’ll leave the conversation on that note.

Thank you so much to the principal executive officer at the GEPF, Musa Mabesa, for joining us to take a look at the performance of the GEPF over the last financial year.

Just a side note on that. The reason I put it out that it would be potentially Dr Musa soon enough is that the principal officer, has a master’s degree from the University of London and usually these are followed by PhDs. So Musa, we’ll see how that works.

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