State Pensions Increase By 7,5 Percent

THE Government Institutions Pension Fund (GIPF) announced yesterday that pensions for its members had been increased by 7,5% backdated to 1 April. Last year, the fund granted a 6,5% pension increase.

“At its meeting held on 27 May, the GIPF Board of Trustees approved a pension increase of 7,5% for its pensioners effective 1 April 2014. This therefore implies that arrear pensions would be backdated to this date,” CEO David Nuyoma said in Windhoek.

He said the increase is above the annual inflation of 5,2% recorded at the end of March. The cost of providing this pension benefit is carried by the GIPF after an assessment of investment performance and the ability of the fund to afford such an increase.

“Factors which influence such a decision include the performance of the Fund over the financial year, historical pension increases and Consumer Price Index (CPI), which is used as a baseline to determine the shift in the prices of basic commodities. It has always been our strategy to grant inflation-linked increases so that our pensioners are able to keep pace with escalating living standards,” he said. Pension increases are not compulsory in the rules of the fund.

Nuyoma said currently the number of active annuitants is over 32 000 and that the fund injected more than N$860 million into pension payment between April last year and March this year.

The overall annual payroll including other benefits paid during the same period amounts to N$1,5 billion. Increases granted to pensioners of the fund over the past 13 years averaged between 6,5% and 10%.

“The average annual returns over the last five years suggest that the fund has been receiving good returns over inflation. This pension increment is thus well within the fund’s affordability margin and will not have aerse financial implications for the institution,” said Nuyoma.

The last actuarial valuation as at 31 March 2013 revealed that the fund has over 103,6% ratio of assets to liabilities.

Source : The Namibian