The Government Employees Pension Fund has disclosed substantial write-downs totalling R3.6 billion in its latest annual financial statements, tabled in Parliament on Tuesday, highlighting persistent challenges in its unlisted investment portfolio managed by the state-owned Public Investment Corporation.
A particularly contentious episode centres on Lanseria Airport, where the PIC recently disbursed R400 million to Acapulco Trade & Invest for a 25% stake in Lanseria Holdings, the airport’s parent company. This payment settled a long-standing default on a R330 million loan originally extended by the GEPF, which had swelled to R550 million by 2023 amid mounting interest and delays. The resolution followed arbitration that valued the stake at R1 billion, a figure sharply at odds with the GEPF’s own assessment of its 38% holding at just R198 million in the 2024/25 statements.
According to News24, this discrepancy suggests the Acapulco portion was deeply underwater, prompting the PIC to initiate legal action to overturn the arbitration outcome and issue a caution to Acapulco – controlled by Kagiso Matjila – against distributing the funds. The episode underscores broader governance strains at the PIC, which oversees nearly all of the GEPF’s R2.69 trillion in assets and has faced scrutiny for its developmental investment mandates.
The Acapulco loan alone incurred a further R180 million impairment in the year under review, capping six consecutive years of deductions that aggregate to R520 million. Among other notable hits, the fund wrote off R481 million linked to Bafepi Agri, the black economic empowerment partner in major agribusiness AFGRI, which the PIC backed with funding for a 12% stake back in 2014. Bafepi, tied to the family of a prominent former stakeholder in related ventures, exemplifies the risks in such equity infusions amid volatile commodity markets and supply-chain disruptions.
Similarly, R298 million was impaired on exposures to Honsha Properties, stemming from a R1.9 billion loan in 2018 that facilitated a 19% stake in Arch Property Fund alongside a direct R2 billion GEPF investment for 20% control. Honsha’s default in 2023 led to the seizure of shares as collateral, dissolving the consortium and converting the debt into equity – a move that averted total loss but still eroded value. Another R178 million blow came from Daybreak Foods, now in business rescue following well-documented operational collapses in the poultry sector.
Despite these setbacks, the GEPF’s overall portfolio expanded by 13.1% to R2.69 trillion, buoyed by resilient equity and fixed-income returns in a year marked by global volatility and domestic headwinds like power shortages. Net profit surged 89% to R512 million, affirming the fund’s actuarial solvency and capacity to honour obligations to its 1.27 million active members and 565 000 pensioners. As reported by the GEPF website, benefit payouts climbed 17.6% to R167.16 billion, with member contributions reaching R95.63 billion; monthly pensions totalled R86.6 billion, while lump-sum disbursements hit R25.9 billion.
Offsetting some pain, the fund clawed back R828 million through reversals of prior impairments, including R223 million from the Land and Agricultural Development Bank and R131 million from South Point Management Services. These recoveries, alongside a 14.1% nominal investment return, demonstrate underlying portfolio strength, even as unlisted assets – now comprising about 12% of holdings – continue to underperform benchmarks.
The statements also spotlight the rollout of the two-pot retirement system, which drew nearly 700 000 applications from government workers since its September 2024 launch. The GEPF processed withdrawals totalling R14.37 billion for 564 547 individuals, averaging R23 554 per claim – a liquidity event that tested administrative systems but ultimately preserved long-term savings discipline.
This influx of activity coincides with heightened oversight of the PIC, where chief investment officer Kabelo Rikhotso was suspended in October following a whistleblower complaint alleging misconduct. According to Bloomberg, the immediate action reflects ongoing efforts to fortify internal controls at Africa’s largest asset manager, amid calls from unions and lawmakers for deeper probes into procurement and conflict-of-interest risks.
With South Africa’s public-sector pensions underpinning economic stability for millions, the GEPF’s disclosures serve as a stark reminder of the tightrope between growth ambitions and prudent stewardship. As the fund eyes further refinements to its mandate under incoming regulatory tweaks, stakeholders will watch closely for signs that lessons from these impairments translate into fortified safeguards.