fundnews

Second Edition 2013

The quarterly newsletter for pensioners of the Government Employees Pension Fund

Payment of Tax Directives: Unsecured Lending

pension benefits All you need to know – It can be a TRAP!
PAGE 2 PAGE 4 PAGE 8

Welcome Life Certificates – No need to confirm Life Status

We are proud to announce that your
pension fund is growing and going from
strength to strength. GEPF received the
inaugural Africa investor African Pension
Fund Initiative of the Year award.
The awards took place at the New York
Stock Exchange in September. We hope
that you are as proud as we are to be part
of such a wonderful fund. Did you know
that the GEPF is the largest investor in
JSE-listed companies?
We at the Government Employees Pension
Fund strive to be the best in all we do. We
hope this newsletter will help you to learn
more about your fund’s progress and the
benefits we offer.
A new system has replaced the Life
Certificate and it is called Auto-Life
Verification (ALV). Basically this means
that pensioners no longer need to visit a
Commissioner of Oaths to confirm their
life status. The ALV system does this
in conjunction with the Department of
Home Affairs.
P3
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in the Appstore search for Scan – QR Code and Barcode.
It is a free download and really easy to use.
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Do you like the Your opinions and inputs are important to

new-look newsletter? us, so please send your suggestions to:
Please let us know if you like GEPF’s new-look The Editor, GEPF Communication,
newsletter by sending us your comments. The
Private Bag X63, Pretoria, 0001
best letter will be published in the next edition
and the author will win a GEPF-branded gift.

Call Centre - 0800 117 669 www.gepf.co.za

GEPF and its Principal awarded
for thei r e xcep ti o n a l busi ness pr acti ces
Dear GEPF member

We are very proud to be able to inform you

that GEPF was awarded the first Institutional
Investor of the Year Award at the Africa investor
(Ai) Investment and Business Leader Awards
held on Friday, 10 October 2013 at a gala
event in New York. While this award is itself a
very notable achievement, GEPF’s Principal
Executive Officer, John Oliphant, was also
named Up and Coming Future Leader of the
Year by Ai.

The international Africa investment (Ai)

Awards were created to reward outstanding
business practices, economic achievements
and investments across Africa, recognising
the institutions and individuals improving the
continent’s investment environment.
John Oliphant

Mr Oliphant feels that, as Africa’s largest pension fund, GEPF has a responsibility to ensure
its investments serve the long-term interests of all of its stakeholders and make significant
and sustainable contributions to the infrastructure and development of Africa.

For GEPF, receiving these two awards means that the investment community is recognising,
in Mr Oliphant’s words, “The valuable work we are doing.”

The winning of this award shows the strength and importance of the pension fund of which
you are a member. It also further shows that the Fund is administered in a way that is
sustainable and that is helping to grow both our country and our continent.

Thank you for taking part

in pensioner Board member elections
During the last few months GEPF’s pensioners have been involved in
the process of electing their representatives to sit on GEPF’s Board
of Trustees through a postal ballot. This process has been completed
and we would like to thank everyone who participated for their efforts.
The successful candidates were Dr Frans le Roux, who was re-
elected as a Trustee, and Mr Cornelius Booyens, who was elected
as the alternate Trustee. In our next newsletter, we explore the Board
and their responsibilities in more detail.

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Pay ment of pensi on benefits
– don’t be fooled by rumours
An unfounded rumour is spreading
regarding GEPF pension payments.
It is important for all GEPF members
and pensioners to know that GEPF
will continue to pay all benefits due
to members leaving according to the
rules. This means that those who are
entitled to a once-off lump sum payment
will receive this payment, while those
entitled to a monthly pension over and
above the once-off lump sum payment
will receive this money.

There are very strict rules about the

kind of benefits that GEPF must pay
and how the money collected must be
invested and safeguarded. These rules
are spelled out in a special law called
the Government Employees Pension
(GEP) Law. The aim of this law and the Your benefits
are guaranteed
rules that guide the Fund is to ensure
that GEPF puts the interests of its
members first at all times.
All GEPF benefits are defined in the GEP Law and
rules, which is why GEPF is called a defined benefit
fund. The advantage of belonging to a defined
benefit fund is that the benefits are guaranteed.
You, as a GEPF member, whether an active
member or pensioner member, will never receive
less than the benefits that you qualify for according
to the law and the rules.

Your pensions are safe:

GEPF is financially sound.

There is no cause to fear

that your benefits will not
be paid going into the
future.

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Auto-Life Verification (ALV)
means no more Life Certificates
WHAT DOES ALV
MEAN FOR ME?
It means that you don’t need to
go to Home Affairs to carry on
receiving your pension –
Who cannot use ALV?
• People outside South Africa
• People without a
South African ID
Our offi ces w ill be
closi ng ov er December
In line with GEPF’s mission of improving services and
ensuring timely and efficient delivery of benefits, the
Fund’s Board of Trustees endorsed the replacement
of the manual issuing of Life Certificates to pensioners
residing in South Africa with an automatic update of the
life status, with effect from 1 October 2011.
The new system is called Auto-Life Verification (ALV),
and it confirms a pensioner’s life status in conjunction
with the Department of Home Affairs. Pensioners who
are in possession of a valid South African identity
document and who live in South Africa on a full time
basis therefore no longer receive Life Certificates from
GEPF.
This means that these pensioners are no longer
required to physically visit a Commissioner of
Oaths to confirm their life status in order to continue
receiving their monthly pension payment (their
annuity). Only pensioners who live outside the borders
of South Africa and those whose status cannot be verified
with the Department of Home Affairs continue to receive
a paper-based Life Verification form which still needs to
be completed and certified by a Commissioner of Oaths.
All pensioners/annuitants receiving the Life Verification
form will only receive one form per annum regardless of
the number of benefits they receive from GEPF.
Our offices will be closed from the 27th to the
31st of December 2013. If you have any queries or
concerns that need to be addressed to our offices,
please keep this in mind.
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Tax directives:
an integral part of GEPF’s processes
TAX DIRECTIVE
A document that tells your pension fund how much tax you owe to SARS
What is a
tax directive?
A tax directive is issued by the South
African Revenue Services (SARS) to
instruct a pension fund on how much
tax to deduct from lump sum payments
(gratuities).
How does
the process work?
SARS has an automated system in place
that allows external organisations, like
GEPF, to request tax directives. Such
organisations submit files that contain
requests for directives to SARS. The
directive request is then evaluated
based on the status of the taxpayer.
SARS then responds, letting the Fund
know what must be done.
If there is any tax that needs to
be paid according to SARS, it is
deducted from the lump sum and is
paid directly to SARS.
5 fundnews | Second Edition 2013
Why is it
important to GEPF?
In order to pay lump sum benefits, we first
need to receive a tax directive from SARS.
The process of requesting and receiving
these directives is thus fundamentally
important to our operations.
What does this mean
for GEPF Pensioners?
GEPF is required to pay tax directly to
SARS based on the amount stated in the
tax directive. The Fund does not decide
how much tax needs to be paid and it is
required by law to deduct the amount
before payment. This can delay payment
of benefits and so we request that you
keep your tax affairs in order to ensure
the fast and efficient payment of benefits
from GEPF.
Don’t fall into
the unsecured lending trap
When you’re looking to take out loans in South Africa, you
have two choices: secured or unsecured. Secured
loans are those that you provide security for in the form of
an asset (your house or your car). If you default (are unable
to pay), the credit provider can sell the asset to make up the
outstanding amount. When a loan is unsecured, it means
that you provide no security, only the promise that you’ll pay
back the loan amount, however, the penalties of not repaying
the loan are very harsh.

SECURED UNSECURED
You provide security – an asset – to No security provided
promise you will repay the loan. If High interest rates
you do not repay the loan, the asset
is taken instead.
Very risky!

There was once a time when an unsecured
loan was only used as an ‘emergency’ loan
that you needed for a necessary but usually
unexpected expense. Today, it is a debt trap.
Moneylenders (loan sharks, mashonisa),
including banks, are now giving cash as
unsecured loans at very high interest rates
and not just for emergencies. They know
you will pay because they have very strict
collection methods.
Five years ago, the average amount that
someone borrowed on an unsecured loan
was R5,000 . The average time to pay this
off was about 29 months. Today, the average
amount being borrowed is R12,000 to be paid
off over 48 months. This is good business for
the moneylenders, and it is growing.
The interest charged on unsecured loans has
also increased. If you borrowed R10,000 in
2007, your interest charges would be R5,800.
So you would pay back R15,800. For example,
if today you borrowed R10,000 to put down as
a deposit on a car or house, your total interest
charges would be R10,200 – that is 77% more.
So you would pay back R20 200 in total.
Reasonable borrowing costs should be around
13.5% (prime + 5%) per year and the time to pay
it off would be 42 months . When you take an
unsecured loan, the moneylenders charge
an average interest of 40%. If you are unable
to make payments, then the moneylenders will
charge you additional costs, increasing your
debt. You can see what a big debt trap these
loans are.

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 One of the ways that the moneylenders
make sure that you pay them back is
called a ‘garnishee order’ or ‘emolument
attachment order’ (EAO). This means that
the moneylender takes what is owed directly
from your salary every month or week before
you are paid. This is dangerous for you and
can mean that you will not be able to buy
basic household items.
The National Credit Regulator (NCR) is
there to help you understand the dangers
of unsecured lending. However, if you are
having a problem with unsecured loans or
are thinking of taking out an unsecured loan,
first talk to your human resources manager
at work. The best advice you can take is to
rather save up for what you need and then
buy it for cash — and avoid the trap of an
unsecured loan.

If you do not pay back an unsecured loan, you

may lose your whole salary!
Source: Mazi Visio Management Company– Unsecured Lending Presentation to GEPF (2013:9)
Source: Mazi Visio Management Company– Unsecured Lending Presentation to GEPF (2013:9)
Source: Mazi Visio Management Company– Unsecured Lending Presentation to GEPF (2013:24)

Keeping in touch with our progress

Mobile offices
GEPF’s mobile offices continue to service members around the country,
including those living in rural areas. Notification of the location of the mobile
offices are advertised in the press so keep an eye out for our visit to your area!

Call Centre technology changes

GEPF is improving its Call Centre by implementing state-of-the-art technology
and offering training to staff to enable them to provide a higher level of customer
service to callers. To experience these changes yourself, feel free to contact
the Call Centre on 0800 117 669.

New security software implemented

GEPF transfers important personal information to banks, SARS, medical aids
and the Post Office on a daily basis. In order to ensure that this information is
safe from intervention, new software and systems have been deployed.

DISCLAIMER
The information provided in this document is protected by applicable intellectual property laws and cannot be copied, distributed or
modified for commercial purposes. While every effort has been made to ensure that the information contained herein is current, fair
and accurate, this cannot be guaranteed. The use of this information by any third party shall be entirely at the third party’s discretion
and is of a factual nature only. The information contained herein does not constitute financial advice as contemplated in terms of
the Financial Advisory and Intermediary Service Act, 2002. GEPF does not expressly or by implication represent, recommend or
propose that products or services referred to herein are appropriate to the particular needs of any third party. GEPF does not accept
any liability due to any loss, damages, costs and expenses, which may be sustained or incurred directly or indirectly as a result of
any error or omission contained herein.

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 OUR Offices

HEAD OFFICE Mpumalanga Port Elizabeth

(Gauteng: Pretoria) 19 Hope Street Ground Floor, Kwantu Towers
Ciliata Building Sivuyile Mini-Square, next to City
34 Hamilton Street Block A, Ground Floor Hall
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Circular Drive Chambers
Bhisho Northern Cape 407 Anton Lembede Street
11 Old Main Road
Free State Kimberley OUR CONTACT DETAILS
No. 2 President Brand Street
Toll free no: 0800 117 669
Bloemfontein Western Cape
Fax: 012 326 2507
21st Floor, No. 1
KwaZulu-Natal Thibault Square
Web address:
3rd Floor, Brasfort House Long Street www.gepf.co.za/www.gepf.gov.za
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Pietermaritzburg E-mail:
SATELLITE OFFICES enquiries@gepf.co.za
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Polokwane 124 Marshall Street (Cnr GEPF Private Bag X63
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Gandhi Square Precinct)
Marshalltown