By Shruti Menon Seeboo
Against the backdrop of continental structural reforms and evolving member needs, the 7th Annual Africa Pension Funds and Retirement Summit 2026 in Mauritius served as a critical forum for charting the future of retirement sustainability. A central highlight of the summit was an exclusive interview with Brian Karidza of South Africa’s Government Employees Pension Fund (GEPF), who provided crucial, data-driven insights into the real-world operationalisation of the landmark “two-pot” retirement system. In this illuminating discussion, Karidza evaluates early member behaviour and demographic trends against the GEPF’s initial actuarial projections, outlines the robust Asset Liability Management (ALM) frameworks shielding long-term infrastructure and private market portfolios from short-term liquidity shocks, and shares vital structural blueprints for cross-border funds seeking to insulate themselves from market volatility while ensuring long-term benefit security. Excerpts:
1. Now that the two-pot system is active, how closely are the actual withdrawal volumes and member behaviours tracking against the GEPF’s initial actuarial projections? Are you seeing distinct trends based on member demographics?
Before implementation, there was no historical two-pot experience on which to base credible projections. The GEPF therefore modelled a range of scenarios and stress-tested liquidity under an extreme scenario where almost all eligible members claimed. Now that we are in the third cycle, we are beginning to develop more credible claim propensity assumptions. Early trends show claim spikes around March, with March 2026 being notably higher, possibly reflecting increased financial pressure. Claims are concentrated among members aged 40–50 and those earning between R250 000 and R500 000 per year.
2. From an ALM perspective, how has the GEPF adjusted its cash flow models to ensure that sudden, short-term withdrawal spikes from the savings pot do not disrupt long-term investment strategies, particularly in illiquid private markets or infrastructure?
The GEPF stress-tested its liquidity buffers against very severe withdrawal scenarios, including claim levels far higher than actual experience. These tests indicated that the Fund had sufficient liquidity to meet savings withdrawal payments without disrupting its long-term investment strategy. Actual claim volumes have been materially lower than the worst-case scenarios. As such, only modest adjustments have been made to cash flow modelling to reflect observed withdrawals. The impact on the overall cash flow profile remains limited, mainly because savings component balances are still relatively low and have only been accumulating since September 2024.
3. The core intent of the two-pot system is to encourage long-term preservation by sealing off the remaining two-thirds of the fund. What is the GEPF’s data showing so far , is early access reducing long-term anxiety, or creating an expectation of the pension fund acting as a short-term bank account?
The experience is mixed. The majority of members have not withdrawn, which suggests that many understand the importance of preservation and view withdrawals as an option for genuine financial need rather than routine access. However, among those who have withdrawn, just over a third have claimed in each cycle, indicating that some members may be using the savings component whenever it becomes available. Overall, the compulsory preservation of the retirement component is an important safeguard, and its full effect will become clearer as more time passes and retirement component balances build up.
4. When it comes to funding shortfalls across the continent, for a massive public sector fund like the GEPF, how do you insulate the fund from severe market volatility and local currency depreciation while ensuring long-term benefit security and inflation-linked adjustments?
No long-term investor can be fully insulated from market volatility. In fact, accepting appropriate investment risk is what allows pension funds to earn returns above ordinary savings over the long term. The key is to manage that risk prudently through diversification across and within asset classes, including local and global exposures where permitted. The GEPF also holds contingency reserves, which provide a buffer against unexpected market downturns and help protect member benefits. As a long-term investor, the Fund is generally able to ride out market cycles and allow time for recovery after shocks.
5. Many African funds look to private equity, infrastructure, and real assets to close funding gaps. Given the J-curve effect and valuation lags inherent in private markets, how should funds structure their pacing of commitments so they do not inadvertently exacerbate short-term funding gaps?
Private market allocations should be built gradually and aligned to the fund’s liability profile, liquidity needs, and contribution inflows. Funds should avoid making large, concentrated commitments that create short-term cash strain before the assets begin producing returns. A disciplined pacing framework is important, with commitments spread across vintages, managers, sectors, and geographies where appropriate. Funds should also maintain sufficient liquid assets to meet benefit payments and avoid being forced to sell assets during stressed conditions. Private markets can support long-term returns, but they must be sized and phased carefully.
6. What is the single biggest lesson or structural blueprint from South Africa’s regulatory and actuarial approach that you believe other African nations can adopt to prevent funding deficits before they materialise?
The key lesson is that sustainability must be managed before deficits emerge. This requires regular actuarial valuations, realistic funding assumptions, proper collection of contributions, and clear accountability where contributions required to fund promised benefits are not paid. Funds also need diversified investment portfolios with sufficient growth exposure, supported by strong governance, effective regulation, and appropriate contingency reserves. Ultimately, a stable and contributory membership base is one of the strongest protections against funding strain, because it allows funds to plan, invest, and meet obligations over the long term.
