GIPF increases pension benefit by 5.5%
Earlier this week, the Government Institutions Pension Fund (GIPF) Board of Trustees approved a pension increase of 5.5% for its pensioners effective 01 April.
The historic pension increases granted to existing pensioners of the Fund over the past 5 years were as follows; 2013 (6.5%), 2014 (7.5%), 2015 (6.5%), 2016 (7%), 2017 (7%).
The Board normally targets inflation-linked pension increases; however it noted that other factors which influence the annual pension increase include the performance of the Fund over the financial year, historical pension increases and Consumer Price Index (CPI) which is used as a baseline to determine the shift in the prices of basic commodities.
“With the year on year percentage inflation rate standing at 3.5% the Board carefully considered the above factors and found the 5.5% pension increase suitable and affordable for the Fund. Over the years the Board has always awarded increases slightly above CPI,” Daylight Ekandjo, Manager: Stakeholders’ Engagement at GIPF said.
According to GIPF, as at the financial year end of 31 March 2017 the number of active annuitants (pensioners and other beneficiaries) stood at 35,081. The 5.5% pension increase will result in the Fund paying out an estimated N$115.8 million in monthly annuities which translates to approximately N$1.4 billion annually.
“Considering the current volatile economic outlook, GIPF remains fully funded and in a sound financial position to afford such a benefit to its pensioners. This is also in line with the Fund’s strategy to protect pensioners’ income from the erosion of the purchasing power of their income. Lastly, we continue to live by our brand promise of guarding and growing our members’ benefits to ensure the sustainability of the Fund while looking after the well-being of all beneficiaries,” Ekandjo said.
Caption: The Fund stressed that the average annual returns over the past 5 years of 12.7% indicate that the Fund has been receiving above inflation returns, adding, therefore, the 5.5% pension increase is well within the Fund’s affordability margin and will not have adverse financial implications for the institution.(Photo by GIPF).