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 The Government Institution Pension Fund (GIPF) is the pension fund established by Government to provide retirement and auxiliary benefits for employees in the service of the Namibian Government as well as Institution established by an Act of the Namibian Parliament. |
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| Namibia had, since about 1919, been administered by South Africa. The public service employees then in service were originally members of the South African Government Service Pension Fund, but in 1981 a separate pension fund, the “Statutory Institutions Pension Fund”, was established for employees in the then South West African Public Service. |
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| Every employee had the option at that stage to transfer, or to remain a member of the South African Fund. For all members who transferred, the actuarial reserve in the South African Fund was transferred to the new Fund. This Fund, known as the “Statutory Institutions Pension Fund” was a pension fund established by an Act of Parliament, and was not subject to the provisions of the Pension Funds Act. |
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| The Fund was administered by the Department of Finance, which in practice meant that the fund was managed by the then Secretary of Finance, Dr. Johan Jones. There were no restrictions relating to the investment of the Fund’s assets, and, contrary to the South African Government Service Pension Fund, the assets of this “Statutory Institutions Pension Fund” were not invested in Government Securities only, but in diversified portfolios, which to a large extent were managed by professional Investment Managers. The result was that the Fund prospered, due to the extended Bull Market run in the 1980’s, and became one of the few funds providing for public service employees that was fully funded on realistic actuarial assumptions. |
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It must, however, be recorded that, as part of the history of the Fund, when it became clear in terms of UN Resolution 435, that SWAPO would win Namibia’s first democratic election, the then Administrator General of South West Africa in 1989 deregistered the Statutory Institutions Pension Fund, as rumours had been spread that the SWAPO Government would take the Members pension assets for their own use, and the fund was de-registered from the South African Registrar’s Office.
As a result of this termination, every Member (and Pensioner) was therefore given the option to either
(i) Transfer their full actuarial reserve, plus share of surplus, to the “to-be-established” Namibian domiciled “Government Institutions Pension Fund.” Full service as a member of the Statutory Institutions Pension Fund was also transferred to the new Fund for those Members who elected to transfer; or
(ii) Privatise their Pension by transferring their actuarial reserve, plus share of surplus, to a Retirement Annuity Fund. If the Member elected this option, “Past Service” was not transferred to the new Fund, but Public Servants had to join this Fund in respect of their future service. (It is interesting to note that, due to the dynamic management of the GIPF by the Trustees, those members who elected to transfer their full service to the GIPF are today much better off than their counterparts who privatized their pensions!). |
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The new Fund, the Government Institutions Pension Fund (GIPF), was established with effect for 1 October 1989. The benefit structure and contribution rates were practically identical to the previous Statutory Institutions Pension Fund, but the main difference was that the fund was registered under the Pension Fund Act, and was administered and controlled by a Board of Trustees, representing both Government as the Employer and the Employees.
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| The net effect of this process was that the Fund was no longer governed by a Statute, but was subject, in exactly the same way as all Private Sector Pension Funds in Namibia, to the provisions of the Namibian Pension Fund Act and the Income Tax Act of Namibia. |
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It is believed that this was the first Government Services Pension Fund in the world to have successfully completed a privatization process, where the end result was a Pension Fund that was fully funded. In addition, the benefits offered to the Namibian Public Servants were considered as being market related.
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| It should be noted that the Trustees delegated a number of functions to outside expert, but remained responsible for the overall operation of the Fund. The trustees appointed a number of assets managers to invest a portion of the Fund allocated to them, and the Trustees implemented an independent monitoring system to measure the investment performance of the respective Managers. The Fund fully funded and built up a safe margin of assets over liabilities. |
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| After Independence, the Trustees began a process of “Namibianizing” the GIPF, and in 1994 they held a Strategic Planning Session, to which all the major Role Players in the Pensions Industry in Namibia were invited. |
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| It was at this conference that it became clear that the GIPF was a fund of National importance, in the context of the size of the fund in relation to the balance of the Pensions Industry in our Country. |
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| It also became clear, from the presentations made by the various Role Players at the conference, that the majority of services provided to the Pension Industry in Namibia at that stage were imported from South Africa. |
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| Given this, a follow-up Conference was held during the early part of 1995, during which a Strategy to Namibianise the GIPF was formulated, and an action plan for implementation was agreed upon. |
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| This included, inter alia, the ongoing management of the GIPF through a Board of Trustees, who would have, as their overall objective, the aim to manage the Fund in accordance with World Class Standard. |
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| In addition, it was agreed to make use of Service Providers who were domiciled in Namibia, and who had a commitment to develop Namibian infrastructure and to grow Namibian skills. |
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| The Trustees then began a process of tendering for services from Namibian domiciled and registered Service Providers. This progress was on-going, but the major decision regarding the re-structuring of the asset management for the GIPF was concluded at the end of 1996. |
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Against this background, it would be interesting to examine some statistics regarding the GIPF.
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| 1. The GIPF has a membership at present of some 75 000, which, in the context of the entire Pensions Industry in Namibia, where there is a membership of some 123 000, results in the GIPF representing some 61% share of the Namibian Retirement Funds Industry.
2. This too applies in terms of the assets of the Fund, where the GIPF has some N$ 24.4 billion under management as at 31 December 2005, which represents approximately 67% of the total assets under management for Namibian Retirement Funds.
3. The GIPF only utilizes Namibian domiciled asset managers for investment management services.
4. The asset managers have been able to consistently maintain investment performance over the past 10 years at the 50th percentile for the GIPF. The Trustees intend to improve this to the upper quartile.
5. The GIPF is the only Retirement Fund in Namibia that has dedicated a percentage of the assets to investments in Development Capital Projects, which has created employment opportunities for Namibians. To date, this represents direct or indirect full time work opportunities for some 1 500 Namibians, as well as work for some 1 300 seasonal workers.
6. A further initiative of the Trustees was to amend the benefit structure of the GIPF in order to give recognition to the history of Namibia.
Previously, a number of benefits were service related, with the result that many Members had inferior benefits, due to the fact that we are a young democracy, and for many of our Namibians, they were only able to become Public Servants after the independence of Namibia. This injustice in the Rules has now been removed.
7. The Trustees have also amended the Rules of the GIPF as it relates to the democratization of the management of the Fund. We now have a Board of Trustees that represents the interest of the Employer (Government) with three Trustees, the Members (Public Service Commission) with three Trustees, one of whom must be a Pensioner, and Organised Labour with three Trustees.
8.The Trustees, as part of their strategic intent to Namibianise all of the services provided to or by the Fund, has decided to take full ownership over the administration of the Fund.
It is clear that the GIPF is operating in accordance with World Class Standards. This became clear from the comments made recently by the World Bank Delegation after their visit to Namibia to report on the introduction of a National Contributory Pension Fund.
The Trustees need to be congratulated on their vision, especially their vigorous strategy to Namibianise the services provided for the fund.
The role that Government needs to play in assisting this Fund of National importance is to ensure that we create a Regulatory Environment that allows the vibrant Pensions Industry in Namibia to continue to grow, and remain, as it is now, World Class.
Government, as the major sponsor of the Fund, needs to ensure that the GIPF retains its strategic position in the market, and in support of the vision and fiduciary responsibility of the Trustees, to ensure that the GIPF remains fully funded. |
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