The war in Iran revealed that South African pension funds are over-exposed to geopolitical events, which is forcing some of the country’s biggest funds to rethink their investment strategy.

This is the feedback from Frans Baleni, chair of the Government Employees Pension Fund (GEPF), who noted that the fund took a major hit from the war in the Middle East.

Speaking in an interview with Moneyweb Radio, Baleni said the GEPF had built a strong track record of protecting public servants’ retirement savings over the past three decades.

“It’s three decades of safeguarding public servants’ retirement funds. At no stage has the fund had to go and beg the National Treasury to close any shortfall,” he said.

“This means that the investment the fund has made over the past 30 years has had good returns.” However, he warned that global instability is increasingly affecting the fund’s investment outlook.

Baleni stressed that the GEPF’s investment strategy has to change given the geopolitical developments. “Just to give an example, with the war in Iran, in the first week, it wiped out R200 billion from our investment.”

He added that the losses highlighted the need for the pension fund to adapt to changing global conditions while still ensuring strong long-term returns for its more than 1.7 million members and pensioners.

To do this, Baleni said the fund is shifting its focus to infrastructure investment. He argued that the GEPF has a responsibility not only to preserve retirement savings but also to support economic growth in South Africa.

“We are now going to be focusing on infrastructure development as part of our investment because it’s our view that while we are preserving the fund, we need good returns,” he said.

He added that this strategy would also help solve our country’s economic problems by boosting local investment.

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