Absa named custodian of South Africa’s Government pension fund

Absa, the Johannesburg-based financial services group led by Kenny Fihla, has been appointed master custodian of South Africa’s Government Employees Pension Fund (GEPF), taking responsibility for assets worth more than R3.5 trillion($217 billion). 

The appointment gives Absa a bigger role in South Africa’s institutional investment market and puts it in charge of the services that support the safekeeping and administration of Africa’s largest pension fund. 

The GEPF has more than 1.2 million active members and more than 565,000 pensioners and beneficiaries.

The fund’s underlying investments will continue to be managed by the Public Investment Corporation, while Absa will handle the custody functions. 

For Absa, the appointment also builds on a relationship with the GEPF that has lasted more than two decades.

The bank has provided transactional banking services to the fund since 2001, including cheque deposit processing and electronic banking solutions.

What the new mandate means 

As master custodian, Absa will oversee the safekeeping and administration of GEPF investment assets, settlement of investment transactions, investment-related cash management and reporting.

It will also coordinate custody services across the fund’s investment operations. 

The bank said the arrangement is expected to strengthen governance, transparency and oversight of the fund’s assets.

The appointment is mainly an institutional and operational change and will not directly affect the day-to-day experience of GEPF members and pension beneficiaries. 

Mosetsana Mahlafunya, group head of Absa Investor Services, said much of a custodian’s work happens behind the scenes, but remains important to the way a large pension fund operates. 

“Our relationship with the GEPF has developed over many years,” Mahlafunya said, adding that Absa had taken time to understand the fund’s requirements and provide the support it needs over the long term.

Absa takes over long-held custody role 

Absa is taking over the custody mandate from Standard Bank, which had served as GEPF custodian for about three decades.

The move gives Absa an opportunity to expand its institutional services business and compete for other large custody mandates. 

Francinah Madise, Absa Corporate and Investment Banking’s public sector client coverage head, said the bank understood the responsibility that comes with supporting a fund tied to the retirement security of public servants, pensioners and their families. 

Absa is one of South Africa’s largest financial services groups, with banking, investment and institutional services across the country and other African markets. Its Investor Services business provides custody and related services to institutional clients. 

The GEPF mandate strengthens Absa’s position in South Africa’s pension and institutional investment market while giving the bank responsibility for the financial infrastructure behind one of Africa’s largest pools of retirement assets.