Insight Interview | GEPF

Speaker 0:
Joining me Now at the Bait Winter Conference, Musa, principal executive officer at the Government Employees Pension Fund. Welcome back, Musa. Thank

Speaker 1:
you. It's good to be back with you.

Speaker 0:
So Musa, in preparation for the GEPF thought leadership conference this year, what are the themes that are shaping the planning for the conference and

Speaker 0:
what are you looking forward to?

Speaker 1:
As a global conference, a thought leadership conference? We seek to discuss all the geopolitical landscape, all the issues affecting pension funds, the economic environment that we are operating in.

Speaker 1:
But we are also looking to delve deeper into, but now broadening the discussions around. Should we divest from some of these investments where topics around fossil fuel investments, the dangers to the environment or should we be engaging? So we are going to be contrasting that divestment or engagement. We will also look at

Speaker 1:
how do we take our investments again on the just transition discussion? How do we move forward in moving away from coal into renewable energy investments? So we will be discussing more of those issues from an investment perspective from a pension benefit administration perspective, the changing policy environment, two part system. What is the changing dynamics within the administration of pensions globally. And we will bring that into contrast in the South Africa

Speaker 1:
in perspective,

Speaker 0:
absolutely so globally. There seems to be this climate change, theme and topic that is dominating a lot of the conversations at some of these events. How is that informing the decisions and the investment allocations that you're making at the GEPF with regards to transition, finance, infrastructure investing and greening the economy?

Speaker 1:
So this goes beyond just talking about it. Now we are saying, How do we as a GP

Speaker 1:
the large allocator? How do we now start taking action, demonstrating that our policies that we have in place we've got a developmental investment policy as well? Our frameworks are in place. We have started reviewing those in the board Should we are approving those in the near future and we have to start implementing those and not only paying lip service to the need for people to implement these policies. So we are looking at how do we physically start implementing and having the impact, the desired impact

Speaker 1:
of these policies going forward so our investments should change, But again, bank of projects is important. While we infuse and the just transition projects going forward?

Speaker 0:
Absolutely. So I watched a recent panel discussion on the just transition. Now South Africa faces a unique challenge of balancing employment security as well as addressing unemployment while moving on to a net zero future. How do you believe that

Speaker 0:
pension funds, or even the government and all the stakeholders that are involved in this process should try and balance these two? These two objectives

Speaker 1:
at the GP F We have always believed this is contextual, so South African challenges should have their own solutions. So we need to look at the term just transition. What will be in the best interest of everyone that is involved in the interest of the employees, the environment,

Speaker 1:
the communities but as well as the interests of the funds or all the allocators of capital as the transition from these coal investments or the fossil fuel investments into renewables? What will be the most responsible, but in a more speedy way to get us into the desirable future? So ours is how do we balance them in a realistic way, taking into account the implications and finding alternatives to look after those people who will be impacted. So we are committed

Speaker 1:
to it. But it's how the engagement around it and how we will achieve that. Those targets.

Speaker 0:
So you mentioned that the GEP follows a developmental agenda so primarily driving impact through infrastructure and private equity asset classes. But now, with the two part system regulatory changes that are coming into the mix, how is this going to influence your balance between II infrastructure and private equity, as well as the needs to satisfy

Speaker 0:
certain redemptions from

Speaker 1:
members? So, as a long term investor as a defined benefit fund, we don't really worry much about liquidity. Obviously, as the complexion of our membership changes and we have more retirees and beneficiaries and less contributors, that does change the strategic asset allocation, the mooted changes to legislation and two part system, and to the extent that there will be a need to access money upfront

Speaker 1:
that will definitely have an impact on our liquidity and how we invest going into the future. So once there is clarity on the policy position, we've seen the draught bill and what it proposes. Once the final bill comes into play and it's enacted, we will then know the extent of the liquidity that we will require and that will force us to go back to the drawing board and

Speaker 1:
see how we restructure our strategic asset allocation. Obviously, we'll have to consult with our actuaries and our asset consultants to see how we rejig the composition of our assets and then that will inform our future requirements going forward. But it is. It is a concern from a liquidity perspective, but we are sure we will find each other with all the players involved.

Speaker 0:
Any closing remarks With regards to GEPF thought Leadership conference

Speaker 1:
this year, we're looking forward to hosting yet another successful conference global perspective. We've got the best speakers, both local and international, and we are sure it will be a success.

Speaker 0:
Thank you very much for sharing your insights. We appreciate your time. Thank

Speaker 1:
you for having me