08 Apr 2016 07:40am
WINDHOEK, 08 APR (NAMPA) The Government Institutions Pension Fund (GIPF)'s Board of Trustees has approved a pension increase of seven per cent for its beneficiaries as from 01 April this year.
GIPF Chief Executive Officer (CEO) David Nuyoma announced this during a media briefing here on Thursday, saying the reason for the pension increase for the 2016/2017 financial year is in line with their philosophy of protecting pensioners' income from the erosion of purchasing power.
GIPF members monthly income (pension) has been calculated as 2,4 per cent of the salary, multiplied by the number of years worked.
This decision followed a thorough consideration of all variables including investment returns and risk on one hand and Consumer Price Index (CPI) on the other, given our policy to target inflation-linked pension increases, he said.
Nuyoma noted that although inflation rates have been largely flat around 3,0 to 3,4 per cent in 2015, there has been a sharp increase to 6,1 per cent during February 2016.
The CEO said the fund took note of the monetary value of the food basket, which continues to worsen and pensioners expect more difficulties due to eminent drought and lower agricultural-production.
He emphasised that the Board's decision to grant a pension increase was not easy, as they had to deal with it against the backdrop of meagre investment returns.
The world markets declined during 2015 affecting everyone else. GIPF was not spared but we take solace in the fact that our average return over the past five years has been around 16 per cent and this is considered to be exceptional for a fund of our size, he said.
Nuyoma noted that the fund's pension payroll continues to grow and by the end of February 2016, the number of annuitants stood at 31 692, with a payout of over N.dollars 2.2 billion in pension benefits.
He said despite the global economic hardship, the fund remains in a sound financial position with its assets to liability ratio now standing at 108 per cent according to a recent actuarial valuation report.