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. As a defined benefit fund, this is an important consideration. The Board considers current needs and the future financial health of the Fund in order to continue paying the benefits that are promised to its members.
Pension Increase: JANUARY 2021
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 2020 was lower than last year, at 0,88%. This resulted from low investment returns in the global markets and exceptional market volatility due to the COVID-19 pandemic.
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 3%, which will be applicable to all pensions with effect from 1 January 2021. This increase is in line with inflation, reported at 3% as at September 2020. The Fund was very cognisant of the financial challenges experienced by pensioners in 2020, and the impact of these challenges was a key factor in making a final decision.
Pensions which commenced after 1 January 2020 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 2020
In line with an established practice of the Fund, lump sum bonuses are paid each December. The Fund has increased the minimum pensioner bonus to R7200 this year.
The Board is pleased to announce that this year's once-off bonus will be paid according to a determined scale and formula:
Household pensions less than R3 500 per month
= R7 200 + 105% x (R3 500 - pension pm)
Household pensions R3 500 per month and above
= R7 200
The bonuses will be payable to all household pensions as at 1 December 2020. For any pensions that commenced after 1 December 2019, the bonus will be pro-rated according to the number of months that the pension has been paid.
The Board is currently reviewing the bonus structure and will keep its members and pensioners informed of any new developments in 2021.
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!