GEPF Presentation to SCoF 14 November 2017

Dr Renosi Mokate – Chairperson GEPF Delegation Dr Renosi Mokate – Chairperson Major General Dries de Wit – Vice Chairperson Mr Seth Makhani – Chairperson: Finance and Audit Committee Mr Abel Sithole – Principal Executive Officer Ms Linda Mateza – Head: Investments and Actuarial Ms Adri van Niekerk – Company Secretary Mr Musa Mabesa – Finance Manager Ms Matau Molapo - Communications

Agenda Overview of the GEPF Governance Financial Highlights Investment Highlights Administrative Highlights Communication and Stakeholder Engagement Highlights Governance Highlights

Overview of the GEPF GEPF is the largest pension fund in Africa Defined Benefit Fund Assets of R1,67 trillion 1 273 784 active members 423 130 Pensioners & Beneficiaries Government is the sponsor of the Fund Juristic Entity – separate from Government

Regulatory Environment Pension Fund established by the Government Employees Pension Law of 1996 Objective: To provide pensions and other related benefits as determined in the GEP Law to members, pensioners and their beneficiaries

Governance Executive Authority – Board of Trustees Members and employers have equal representation on the Board 8 employer representatives 6 employee representatives 1 pensioner representative 1 forces representative Board shall manage the Fund in terms of the powers, and duties conferred upon it as per the GEP Law. Board ensures the effective and efficient administration of the Fund and is accountable for the investment performance. Written Question 1

GEPF Board Governance Board of Trustees Accountable for the strategic management of the Fund Benefits and Administration Committee Finance and Audit Committee Governance and Legal Committee Investment Committee Remuneration Committee Valuations Sub Committee Social and Ethics Sub Committee Committee structures are aligned to the strategic objectives of the Fund. Provide oversight and monitoring of outsourced services.

Questions on Presentation Operating Model Outsourced Investment and Administration functions. Investments – PIC and other investment managers Governed by the Investment mandate. Administration – Government Pensions Administration Agency Governed by an Administrative Agreement and SLA Master Custodian Other Service Providers: External Auditors Valuator Legal, etc. Questions on Presentation 21 & 22

Financial Highlights

Questions on Presentation Investment Portfolio: Annual to 31 March each year Questions on Presentation 1 R billions

Questions on Presentation Return on Investments: Annual to 31 March each year Questions on Presentation 4 & 5 %

Contributions Received: Annual to 31 March each year R billions

Benefits Awarded: Annual to 31 March each year R billions

Questions on Presentation Financial Position: 31 March 2016 DATE FUNDING LEVEL % VALUATOR 31 March 2008 100.0* Alexander Forbes Financial Services 31 March 2010 31 March 2012 Towers Watson 31 March 2014 31 March 2016 Affordable reserves determined by Valuator – Actuary appointed ito GEP Law and Rules Actuary propose assumptions – Board approves Next statutory valuation – 31 March 2018 Questions on Presentation 8, 9 & 10

Pension Increases: Annual to 31 March each year Questions on Presentation 12 Date of Increase Pension Increase (excluding CPI catch-up) CPI catch-up (percent of CPI) Year-on-year inflation (CPI) Pension increase awarded as a % of inflation 1 April 2006 4.50% 90% 3.35% 134.33% 1 April 2007 5.50% 100% 5.41% 101.66% 1 April 2008 7.00% 8.42% 83.14% 1 April 2009 9.00% 11.76% 76.53% 1 April 2010 5.60% 4.82% 116.18% 1 April 2011 3.58% 125.70% 1 April 2012 4.80% 6.12% 78.43% 1 April 2013 6.00% 107.14% 1 April 2014 5.30% 100.00% 1 April 2015 5.80% 1 April 2016 110.4% 1 April 2017 6.6%

Investment Highlights

Written Questions 4 & 9 Investment Mandate Most GEPF investments are managed by the Public Investment Corporation (PIC). Investment mandate was introduced in 2007. Legal document through which the GEPF appoints PIC as an investment manager with the authority to act as its agent in managing and administering investments on behalf of GEPF. Investment mandate is subject to specified investment guidelines regarding: The Strategic Asset Allocation (SAA) agreed to with the Minister of Finance in fulfilment of section 6(7) of the GEP Law The investment portfolio structure, risk parameters, benchmarks and fee arrangements. Written Questions 5 & 13

Strategic Asset Allocation - 31 March 2017 Asset Class Guideline % Actual 2017 Cash and Money Markets 0 – 8 4 Domestic Bonds 26 – 36 34 Domestic Property 3 – 7 6 Domestic Equity 45 – 55 49 Africa Equity 0 – 5 1 Foreign Bonds 0 – 4 Foreign Equity 1 – 5 5 Total 100

Bills and Bonds Written Question 3

Investment Summary

Investment Managers Written Question 6 & 7

Unlisted Investments Isibaya Fund I (around R30 billion) Isibaya Fund II (R70 billion committed in 2016) Private Equity South African Private Equity Fund II (R8.5billion) Rest of Africa Private Equity Fund I (R6.5 billion) Developmental Investments The GEPF aims to invest 5% of total assets in Developmental Investments (DI). The DI portfolio managed by the PIC on behalf of GEPF is as structured as follows: Energy infrastructure Social infrastructure Economic infrastructure Priority Sectors SME Fund Environmental Infrastructure Rest of Africa Developmental Investments

Questions on Presentation Investment Monitoring Performance monitoring through the master custodian: Detailed monthly reports Compliance reports Performance monitoring through the PIC: Monthly summary reports Detailed quarterly reports Presentation and written report to GEPF Investment Committee Economic overview Asset allocation and portfolio holdings Investment performance and attribution analysis Per asset class: performance, outlook, strategy Specific investments (e.g. underperforming, in the media etc.) Questions on Presentation 20

Responsible Investing The GEPF believes in integrating Environmental, Social and Governance (ESG) factors into investment decisions. Founding signatory to the United Nations backed Principles for Responsible Investment. Founding signatory of the Code for Responsible Investing in South Africa (CRISA). The Fund recognises its role in Society, specifically the commitment to integrate ESG factors into its investment policies for the long-term sustainability of the Fund. Shareholder engagement also takes place according to the policy.

Administrative Highlights

Benefit Enhancements Finalised negotiations on the following benefit changes/enhancements AVC Preservation Fund Increased Funeral Benefits (Gazetted) Child’s Pension Market Value Adjustment (Gazetted) Benefit Discharge Anomaly (Gazetted) 100% of CPI Pension Increases Written Question 10

Member Services Visits to GEPF Office – 482 908 Telephone Enquires – 814 348 Mobile Office – 115 825 97% satisfaction rating Implemented a queue management system Electronic submission of claims Self-service function in pilot phase

Unclaimed Benefits

Unclaimed Benefits – Age Analysis 31 March 2016 Period AMOUNT Amount Percentage % Case Cases Percentage % 2006-2007 547 679.80 0.12 286 1.76 2007-2008 1 282 396.82 0.28 316 1.95 2008-2009 1 164 649.23 0.26 569 3.50 2009-2010 4 968 910.87 1.10 900 5.54 2010-2011 4 174 015.98 0.92 502 3.09 2011-2012 7 602 023.81 1.68 602 3.71 2012-2013 7 382 917.96 1.64 676 4.16 2013-2014 75 191 980.78 16.66 3 534 21.75 2014-2015 61 375 740.02 13.60 3 064 18.86 2015-2016 287 613 902.95 63.73 5 796 35.68 Grand Total 451 304 218.22 100 16 245

Communication and Stakeholder Engagement Highlights

Communication Roadshows Retirement Member Campaigns 7 Provinces visited – 6 919 attendees Retirement Member Campaigns Member guide condensed into Z-folder News letters Mobile Vans Media campaigns

Stakeholder Interaction Presentations to PSCBC Various Labour Unions Pensioner Organisations Written Question 10

Governance Highlights

Governance 20th Unqualified Audit Report Reviewed all governance related policies Reviewed Board Charter Approved Combined Assurance Model

Thank you