Retirement Age Increase – Since August 1st, 2025, the Government Employees Pension Fund has changed retirement ages from 60/65 to 67 years among South African government employees. It is an effective policy intervention since its impacts are felt by over 1.2 million active members with sustainability challenges emanating from growing life expectancy and other economic challenges. This piece details what changes are to be effected, consequences thereof, as well as measures to be taken by such employees to align with such changes.
Why Was South Africa Retirement Age Altered?
Having assets of R2.34 trillion, GEPF ranks as the biggest pension fund in Africa that is challenged by the fact that South Africans on average are now living longer and inflation at 5.2% is relatively high. And by supporting a rise in retirement age, GEPF hopes to:
- Assure financial viability through longer contribution durations.
- Make sure that this is compatible with international trends, with nations such as Britain and Australia raising their retirement ages as well.
- Retain a higher funding level of 110.1% for 548,765 pensioners and future retirees. The action reduces payout period, which enhances the fund’s sustainability over the longer run.
Who is Affected?
This new retirement age is applicable to all GEPF members, such as teachers, nurses, police officers or other municipal employees under the Public Service Act. The employees within or near their 60th or 65th birthdays will need to work until they are 67 years of age to receive complete benefits. The complete benefits are not applicable to those employees who exited the service prior to 1 August 2025. Early retirement after age 55 remains with the consent of the employer, but benefits are scaled down by 0.33% per month before 67.
Effect on Pension Benefits
Pensions are payable under a defined benefit structure, with pensions determined by years of service and last average salary. Serving longer to age 67 translates to additional GEPF contributions and thus increased pension benefits; for example: A R10,000 pension to be paid from April 2025 monthly shall be increased by 2.9% as indicated by CPI, which works out to an additional amount of R290. Service extended might also accrue increased annuities and gratuities. For members compelled to retire early, penalties for less than complete retirement might altogether offset such benefits. The GEPF Self-Service portal contains a benefit estimation calculator to assist members.
Economic and Career Planning
This shift entails a rethinking of retirement plans:
- Financial Adjustments: Increase voluntary contributions or diversify investments to strengthen the savings base.
- Career Development: Pursuit of upskilling is necessary to remain competitive, especially in skilled job areas.
- Health and Wellness: Access to mental health and wellness initiatives through GEPF to provide for career longevity.
Employees with an age of 64–65 and 30+ years of contributions are entitled to an optional early programme of exit as well, details of which are yet to be provided by GEPF.
