Each year the Board of Trustees ("the Board") of the Eskom Pension and Provident Fund ("the EPPF" or "the Fund") determines an annual pension increase, in accordance with the Fund's pension increase policy.
At this time of year, the Board also considers the payment of a once-off pensioner bonus.
The Fund targets, but does not guarantee, a pension increase on 1 January each year equal to the year-on-year increase in inflation. The Fund may grant an increase lower than the inflation rate if the Fund’s investment returns are insufficient for the increase to be affordable. An affordable increase is one that can be granted without placing a strain on the sustainability of the Fund into the future.
Pension Increase: JANUARY 2020
The pension increase is determined after considering various factors, including the pension increase policy, the Rules of the Fund, and investment returns.
The Fund’s net investment return over the financial year ending on 30 June 2019 was relatively low, at 4.5%. This resulted from low economic growth in South Africa, a weakening Rand, and low investment returns in the global markets.
As a result, after careful consideration and taking into account the long-term financial health of the Fund, the Board has approved a pension increase of 2%, which will be applicable to all pensions with effect from 1 January 2020. This is higher than the affordable increase determined through the Fund’s actuarial valuation. However, the Fund had to consider the tough financial challenges facing its pensioners.
Pensions which commenced after 1 January 2019 will be pro-rated according to the number of months in the preceding year for which the pension has been paid by EPPF.
For more information about how the pensioner increase is determined,click here.
PENSIONER BONUS: December 2019
In line with an established practice of the Fund, lump sum bonuses are paid each December.
In an effort to provide some relief in these demanding economic conditions, the Fund has increased the minimum pensioner bonus from R6000 in 2018, to R7000 this year. Bonuses will be payable on 1 December 2019.
We must emphasise that bonus payments are not guaranteed, and there could be years in which the Fund cannot afford the payment. The level of bonuses payable this year has resulted from special considerations and is not likely to be repeated in future.
The Board is pleased to announce that this year’s once-off bonus will be paid according to a determined scale and formula.
The bonuses will be payable to all household pensions as at 1 December 2019. For any pensions that commenced after 1 December 2018, the bonus will be pro-rated according to the number of months that the pension has been paid.
In all its decisions, the Board has to consider current needs as well as the future financial health of the Fund in order to continue paying the benefits that are promised to its members.
The Board is currently reviewing the bonus structure and will keep its members and pensioners informed of any new developments in 2020. The Board and the management of the Fund are committed to ensuring that in staying ‘Invested in our members’, we demonstrate efforts toward sustaining the financial health of the Fund for years to come.
The Board would also like to take this opportunity to wish all our pensioners and their families a safe and wonderful festive season and a happy New Year!
Board of Trustees
Eskom Pension and Provident Fund