GIPF registers huge year end growth

THE Government Institutions Pension Fund (GIPF) asset base showed significant growth according to the organisation’s just-released annual financial results.

GIPF assets grew to N$26,4 billion in the year ended March 31 2006, which was a 37,6 per cent increase from N$19 billion recorded in March 2005. GIPF Chairman, Advocate Hartmund Ruppel said this development was positive for the country, as GIPF assets contribute heavily towards GDP, make up about 71 per cent of the pension funds industry and 40 per cent of the total assets of the financial services sector.”The GIPF is liquid and pension contributions received from the employees and the employers are more that adequate too pay claims, thus there is no need to liquidate investments to pay claims.”The gap between the benefits paid and contributions received is however narrowing, which is a concern for future free cash flow within the Fund,” said Ruppel.He added that the board had selected asset managers who had been entrusted to invest GIPF’s assets, who had outperformed the benchmark that the Fund had set for them.On the issue of GIPF being under investigation, Ruppel said the organisation was awaiting a full report from the Namibia Financial Institutions Supervisory Authority (Namfisa), which carried out the investigation.Ruppel said the organisation had made a decision to exit several projects funded under the controversial Development Capital Portfolio (DCP) – which was the root cause for the organisation’s investigation by Namfisa.A moratorium was set in 2002 to prohibit approval of new DCP loans, and Ruppel said this was still in place and had been adhered to.Ruppel said GIPF had already started negotiations with directors and shareholders of the Namibia Grape Company, Karas Abattoir and Tannery, and Namibia Pig Farm with regard to their interest in buying these companies.He said the trustees were aware of the socio-economic consequences such as loss of employment by exiting these projects, and would try to sell the companies to the public to ensure they continued operating.”The DCP is demonstrably a case study militating against the idea of compelling the placement of large amounts of savings – expected to be invested in order to yield returns which would enable pension funds – and more specifically in our case the GIPF, to meet the long term and economically very critical and significant liabilities to its members when they in most cases, become entirely dependent on the payment of their pensions.”Ruppel said while awaiting the Namfisa report on its findings, the GIPF board of trustees would this month conduct its own review into the DCP investments – to establish what went wrong, why several investments performed badly and find resolutions for the problems.”In view of the growth of the asset base it would seem to us that the Fund will be able to meet its liabilities to its current pensioners and its 75 000 contributing members for the foreseeable future,” said Ruppel.GIPF Chairman, Advocate Hartmund Ruppel said this development was positive for the country, as GIPF assets contribute heavily towards GDP, make up about 71 per cent of the pension funds industry and 40 per cent of the total assets of the financial services sector.”The GIPF is liquid and pension contributions received from the employees and the employers are more that adequate too pay claims, thus there is no need to liquidate investments to pay claims.”The gap between the benefits paid and contributions received is however narrowing, which is a concern for future free cash flow within the Fund,” said Ruppel.He added that the board had selected asset managers who had been entrusted to invest GIPF’s assets, who had outperformed the benchmark that the Fund had set for them.On the issue of GIPF being under investigation, Ruppel said the organisation was awaiting a full report from the Namibia Financial Institutions Supervisory Authority (Namfisa), which carried out the investigation.Ruppel said the organisation had made a decision to exit several projects funded under the controversial Development Capital Portfolio (DCP) – which was the root cause for the organisation’s investigation by Namfisa.A moratorium was set in 2002 to prohibit approval of new DCP loans, and Ruppel said this was still in place and had been adhered to.Ruppel said GIPF had already started negotiations with directors and shareholders of the Namibia Grape Company, Karas Abattoir and Tannery, and Namibia Pig Farm with regard to their interest in buying these companies.He said the trustees were aware of the socio-economic consequences such as loss of employment by exiting these projects, and would try to sell the companies to the public to ensure they continued operating.”The DCP is demonstrably a case study militating against the idea of compelling the placement of large amounts of savings – expected to be invested in order to yield returns which would enable pension funds – and more specifically in our case the GIPF, to meet the long term and economically very critical and significant liabilities to its members when they in most cases, become entirely dependent on the payment of their pensions.”Ruppel said while awaiting the Namfisa report on its findings, the GIPF board of trustees would this month conduct its own review into the DCP investments – to establish what went wrong, why several investments performed badly and find resolutions for the problems.”In view of the growth of the asset base it would seem to us that the Fund will be able to meet its liabilities to its current pensioners and its 75 000 contributing members for the foreseeable future,” said Ruppel.