Dear EPPF Pensioner
I want to give you assurance that the EPPF is focused on ensuring the Fund’s interests, and therefore yours as a valued pensioner, are protected. I write to you at a time when our daily news feeds contain reports of natural disasters, social and political upheaval, increasing levels of crime and corruption, infrastructure challenges and rising inflation.
At the EPPF, we’re continuing to navigate these uncertain times with discipline to minimise the negative impact. We’re committed to regular communication with you so you’re aware of matters that are most relevant.
Here’s a recap of key matters from the past few months.
1. Rule Amendment 2
You’ve shared suggestions and comments on various issues, including the annual pension increase. We took that feedback, deliberated and carried out extensive research to understand the impact on the sustainability of the EPPF. Rule Amendment 2 was then drafted and approved by the Financial Sector Conduct Authority. It came into effect on 19 January 2023. Here’s an overview of the information we’ve shared with you.
When a pensioner passes away shortly after retirement
Rule Amendment 2 has implications for pensioners:
- who retire from active service and pass away within five years of retirement, and
- are single and without a spouse or children who are eligible beneficiaries.
Rule Amendment 2 means that in the case of the above scenario, the remainder of the pension that would have been payable over the first five years after retirement will be paid to the late pensioner’s estate, subject to Section 37C of the Pension Funds Act. This means that when the pensioner passes away, an investigation will be carried out to determine if they had any eligible dependents or beneficiaries. If there are none, the benefit will be paid into their estate which will then be distributed in line with their will, or applicable laws if there is no will in place. Click here to read the EPPF’s Fund Rules and Rule Amendments
The calculation of the annual pension increase
The annual pension increase has been top of mind for us. We target to pay increases in line with inflation as measured by the Consumer Price Index (CPI). Where this is not possible, the increase will be a minimum of 60% of CPI. The next pension increase outcome, which will take effect in January 2024 and will be announced towards the end of this year, will be in line with Rule Amendment 2.
2. Pension increase policy review
We have heard your concerns that the minimum pension increase of 2% has no reference to inflation. We also listened to your request for us to review the Pension Increase Policy. We consulted three actuarial firms. The conclusion was that the EPPF’s methodology for determining pension increases is in line with industry practice, however the minimum increase should the Fund decide to have one, needs to be linked to a percentage of inflation.
In terms of the Pension Increase Policy, the EPPF aims to pay pension increases equal to CPI increases annually if it can afford to do so. There are years in which the affordability criteria make it possible for full CPI increases to be paid, and there are years when this isn’t possible. That led us to carrying out a review in 2021/22 of pensions paid to members over the last two decades to establish the gap between what was paid and what would have been paid on a full inflation adjusted basis. As the EPPF could afford to pay the shortfall, a
catch-up exercise was rolled out last year that resulted in a minimum pension increase of 5% being granted to all pensioners and then an additional pension specific top-up for those pensioners who lagged inflation, with the top-up going up to a maximum of 3,7%, resulting in a total increase of 8,7% for some pensioners.
As of 1 February 2022, all pensions were adjusted to CPI up until that point. This year, considering affordability, a 4% pensioner increase was paid with effect from 1 January 2023 while CPI was at 7,2%. We recognise that this does not meet your expectations and we understand that inflationary pressures affect you significantly. As we are navigating an uncertain period, locally and globally, the situation requires us to adopt a fiscally responsible approach. As the EPPF, our financial strength is what allows us to ride these turbulent economic waves comfortably. Our intention is to preserve this stability so you can always have peace of mind that your pension is safe going into the future.
We recognise that this is a very important and sensitive issue for you. We are also mindful that as we approach the Trustee election season, certain matters become the focus for candidates to campaign. Sometimes this happens with inaccurate interpretation of information which ends up stoking the fears of pensioners. In order to provide you with the necessary information, we will be hosting pensioner engagement sessions where we explain our reasoning. My team and I look forward to meeting you in these engagements.
3. Improving communication and engagement with members
We are continuously improving our service offerings to you at our various touchpoints from our tollfree contact centre, to our digital channels, at head office and in our regional offices.
We encourage you to use our official channels to make contact so we can respond to you within a reasonable period and so that you get correct information. You can phone us
toll-free during office hours on 0800 11 45 48 or email info@eppf.co.za.
If you’d like to visit us in-person, click here for the contact details for our various regions.
Online pensioner engagement sessions
We’ll be hosting pensioner engagement sessions next month. Click on the links below for the online meetings:
4 April 2023 (Tuesday) - 12:00 - 13:30 - Click here to join the meeting
12 April 2023 (Wednesday) - 09:00 - 10:30 - Click here to join the meeting
26 April 2023 (Wednesday) - 12:00 - 13:30 - Click here to join the meeting
In-person pensioner engagement sessions
We’ll also host in-person engagement sessions and you’ll be invited as soon as we finalise the schedule.
In the meantime you can read our Frequently Asked Questions page.
For our pensioners who’re based outside South Africa
If you’d like to contact us telephonically, please do so during between 8:00 and 16:45 (SAST or GMT+2) on weekdays. Dial +27 (0)11 709 7400. Alternatively, you may email info@eppf.co.za
4. Investment performance
The EPPF’s assets under management grew from R169.6 billion as at 30 June 2022 to
It’s important to know that the EPPF’s funding ratio remains healthy which means our assets significantly exceed our liabilities in order to cover all future pension requirements.
Below is the investment performance against applicable targets as at 31 December 2022. The Fund delivered returns lower than the inflation target. |
Generating investment returns higher than inflation has been difficult for investors in recent periods due to volatile investment markets as well as significantly higher inflation compared to previous periods. Our Integrated Annual Report, published last November, reflects on the progress made in optimising the management of investments in the 2021/22 financial year.
1. Eskom’s unbundling
I know you will be interested in an update on the topic of Eskom’s unbundling. We are working closely with Eskom as the National Transmission Company South Africa SOC Ltd comes on board. As we do this, we would like to assure you that your retirement funds are safe and there’s no need for concern. These changes are not expected to have an impact on pensioners.
2. A tribute to Eskom Guardians
Let me take a moment to celebrate three important groups.
Firstly, congratulations to Eskom Holdings SOC Ltd on its centenary birthday. This month marks the 100th year of Eskom’s existence. This is indeed a significant milestone within the history of the country as well as corporate South Africa. We celebrate the effort and dedication of former and current employees.
Secondly, I commend the thousands of dedicated, honest and hardworking Eskom Guardians who show up every day to address the numerous challenges that face the company and country. Their courage and commitment to South Africa are commendable. We salute the Eskom Guardians and stand in solidarity with them as they work tirelessly to deliver on their mandate with resolute dedication. We wish them all the strength.
Last but certainly not least, I thank the thousands of Eskom pensioners who have inspired us over their working years with their passion and determination. It’s our honour now to serve you as the EPPF.
Kind Regards
Shafeeq Abrahams
Chief Executive and Principal Officer
