Government Institutions Pension Fund (GIPF), 45,497 pensioners will receive more on their monthly annuities after the Fund jerked up the benefits this month.
The increase of 5.46% comes after the 4.62% increase for 2022/2023 financial year, GIPF announced last week.
The pension benefit increase was effective 1 April 2023.
According to the Fund, the Board of Trustees decided on the rate after actuarial due diligence that, among others, looked at the Fund’s average annual return over the last five years, the current and future liabilities, and the assets of the Fund.
Considering the volatility of returns from year to year, the Fund has adopted a 3-year averaging method, with the returns of each December year-end serving as a reference point.
“A pension increase serves to cushion pensioners from unexpected changes in their purchasing power,” the Fund said, adding that the continual ability to increase members’ benefits annually is driven by the Fund’s collective commitment to guard and grow members’ financial security.
The Fund explained that it aims to match the Namibian consumer price index to ensure that pensions in payment retain their purchasing power over time, subject to affordability.
The year-to-date inflation averages at 7.1% compared to 4.5% in the same period last year.
According to GIPF Principal Officer David Nuyoma, amidst the current volatile economic outlook resulting in increasing fuel and commodity prices, the Fund will continue to provide guaranteed benefits to members.
“In awarding pension increments, the Fund constantly strikes a delicate balance by considering the volatile investment returns, and global geo-political circumstances,” Nuyoma affirmed.
Furthermore, he said there is a need to manage expectations regarding pension increases and to ensure that pensioners live reasonably within inflation parameters.
He said if the monthly payment is stagnant while prices of goods and services go up, the purchasing power of pensioners dwindles as does their living standard.
Thus, returns or annuities are structured in a way that they cater for inflation.
According to GIPF’s 2021 annual report, pensioners receiving regular payments increased from 39,504 to 45,497, representing an increase of 15% when compared to a decrease of 3% from 40,666 to 39,504 during the 2020 financial year.
During 2021 the Fund paid out N$5,2 billion compared to N$4,9 billion in 2020 in benefits to members, representing an increase of 5% year-on-year, while pension contributions from contributing employers rose 5% to N$4,9 billion.
The increase in benefits payments is mainly attributable to the increase of newly retired, higher-earning members, new additional annuitants of 6,238 (2020: 2,850), and an annual inflationary adjustment of 3% offered to pensioners. Email: firstname.lastname@example.org