Issued by the FW de Klerk Foundation on 26/10/2023


The Government Employees Pension Fund (GEPF) recently introduced a transformation policy aimed at addressing historical inequalities within South Africa and the financial sector. While the GEPF’s intentions are undoubtedly noble, it is crucial to scrutinise the policy for potential legal conflicts and practicality.

As South Africa’s largest pension fund, the GEPF boasts assets exceeding R2.3 trillion. Its longstanding mission has been ensuring the financial well-being of Government employees by providing a secure source of retirement income. The fund operates under the Government Employees Pension Law of 1996 (GEPL), which provides the legal framework to safeguard the pension benefits of its members.

The GEPF’s transformation policy outlines four key areas intended to guide its transformative efforts, namely: 

Transformation at Industry Level: The policy’s main objective is to foster the growth of black-owned asset managers, private equity fund managers, fixed-income asset managers, audit firms, actuaries, and other emerging financial service providers.

Economic Transformation: The policy emphasises fostering economic growth and supporting access to finance for black-owned small-and medium-sized enterprises, with the ultimate goal of job creation and economic development.

Socio-economic Transformation: The GEPF’s policy is designed to advance the objectives of Broad-Based Black Economic Empowerment (B-BBEE) and contribute to broader economic transformation in South Africa.

Environmental Sustainability: In line with broader societal goals, the policy seeks to promote environmental sustainability, including a just energy transition and sustainable development.

However, the GEPL’s fundamental objective is to provide pensions and related benefits to members, pensioners, and their beneficiaries. Critics therefore argue that directing pension money toward political goals could lead to potential legal conflicts.

As held by the Association for Monitoring and Advocacy of Government Pensions (AMAGP), the policy “is a brazen violation of the founding Government Employees Pension Law.” This assertion is based on the understanding that the law primarily aims to provide pensions and related benefits to members, pensioners, and their beneficiaries, without allowing the diversion of pension funds for political purposes, potentially rendering the GEPF’s transformation policy unlawful.

Moreover, concerns have been raised about the suitability of the GEPF’s board of trustees in approving a policy that potentially violates the GEPL. The question arises of whether the board members meet the ‘fit and proper’ test prescribed in legislation for all trustees of pension funds, emphasising the importance of governance and accountability within the fund.

In addition to the legal aspects, it is essential to evaluate the practicality of implementing such an ambitious policy within a pension fund. While the policy’s objectives are important, the practicality of achieving these goals through a pension fund mechanism deserves thorough examination. The GEPF’s primary mission has always been to secure the financial future of government employees, involving minimising investment risks and ensuring the fund’s long-term stability. With the cost of living dramatically on the rise, the transformation of an already concentrated financial sector begs the question of whether transformation efforts should start closer to home, rather than through a politically motivated pension policy. 

In conclusion, addressing the concerns regarding the alignment of the GEPF’s transformation policy with the GEPL is crucial. While the policy aims to mitigate historical inequalities and foster socio-economic development in South Africa, practicality, legal compliance, and member protection must be at the forefront. It’s worth emphasising that the burden of achieving the Government’s political objectives and managing associated risks should not be shifted onto retired public servants. A more effective approach to fostering economic transformation involves the implementation of policies geared toward sustained economic growth, the eradication of corruption, and addressing the state’s capacity to provide essential services for the health, well-being, and security of South Africans. These actions would significantly contribute to genuine transformation.

Striking a balance between these noble goals and the GEPF’s legal and practical obligations is paramount. The GEPF must navigate a path that harmonises its transformative mission with adherence to the law and members’ well-being, contributing to South Africa’s overall progress.