Namibia’s largest pension fund, the Government Institutions Pension Fund (GIPF), has announced a 4% increase in pension benefits, effective April 1 2025, citing strong financial performance and inflationary considerations.
The adjustment applies to all GIPF pensioners, qualifying annuitants, and beneficiaries, including spouses and children.
However, pensioners who have been receiving payments for less than a year by March 31, 2025 will receive the adjustment on a pro-rata basis.
GIPF’s Chief Executive Officer and Principal Officer, Martin Inkumbi, explained that the decision to raise pensions was based on the Fund’s sustainability and its ability to cover liabilities.
He stated, “the Board of Trustees took this informed decision following the recommendation from the fund’s actuary, which was based on the sustainability of the fund , recent developments in local inflation, and reasonable benefit expectations of members and pensioners.”
Affordability and inflation factors
The fund has historically defined affordability as the difference between the net return earned on its investments and the net interest applied for discounting pension liabilities, which is currently about 3.73% per annum.
According to Inkumbi, pension adjustments are typically made every year on April 1, with increases usually ranging between 75% and 100% of the National Consumer Price Index (NCPI), depending on the Fund’s affordability.
In light of recent inflation trends, GIPF has aimed to align pension increases with the NCPI to preserve the purchasing power of pensioners.
However, data from the Namibia Statistics Agency (NSA) shows that the average inflation rate for 2024 declined to 4.3%, down from 5.9% in 2023—suggesting that the 4% increase in pension payouts will go a long way in helping pensioners keep pace with living costs.
Inkumbi explained that “the Trustees aim to match the NCPI to maintain the purchasing power of pension payments over time, considering affordability on the part of the GIPF.”
He noted that the 4% increase was determined following a comprehensive actuarial review, considering the Fund’s average returns and projected liabilities.
GIPF’s role in Namibia’s economy
GIPF’s assets now exceed $8.8 billion, and the fund plays a pivotal role in Namibia’s financial ecosystem, with investments in key sectors such as infrastructure, housing, healthcare, and financial services.
As of December 2024, the Fund had 55,507 active annuitants receiving combined monthly pension payouts of approximately $17.4 million, equating to over $209 million annually.
GIPF is a defined benefit pension fund, meaning members are guaranteed a set retirement benefit based on their salary and years of service. The fund is compulsory for government employees, with both the Namibian government and employees contributing monthly.
The increase in pension benefits comes as part of GIPF’s commitment to ensuring that pensioners retain their purchasing power despite changing economic conditions.
