Retired government employees will receive 100% of the November inflation rate as their increase this year.

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The Government Employees Pension Fund (GEPF) announced an annual pension increase of 3.5% to its pensioners effective 1 April 2026. This pension increase is 100% of the 3.5% inflation rate for the 12 months ending 30 November 2025.

This is significantly higher than the 2.9% pension increase awarded to pensioners in April 2025. It is also marginally above the average 2025 inflation rate of 3.2%, highlighting the discrepancy between year-on-year and average annual inflation rates.

The GEPF uses the November year-on-year Consumer Price Index (CPI) to determine annual increases. However, year-on-year rates can fluctuate significantly above and below the average rate for the year, depending on the base rate.

In 2024, while the average inflation rate for the year was 4.4%, the fourth-quarter CPI figures decreased significantly due to falling fuel prices. In January 2024, the price of goods measured in the CPI increased by 4.6% compared to January 2023; by June 2024, the year-on-year CPI figure had risen to 5.1%. Yet, due to falling fuel prices, the year-on-year CPI figure fell to 2.8% in October and 2.9% in November.

GEPF pensioners were unhappy and believed that they had been shortchanged.

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The GEPF argued that, over time, year-on-year fluctuations average out and that it was neither necessary to change the measurement to match the annual average CPI figure, nor to use a core inflation rate that excludes fuel price fluctuations.

This year proved the GEPF’s argument as the year-on-year figure is above the average inflation rate for the year. The GEPF also highlighted that this increase exceeds the 75% CPI base increase required by the Government Employees Pension Law and Rules.

“The decision to grant this increase reflects GEPF’s strong commitment to balancing the interests of its pensioners with the fund’s long-term financial stability. All pension adjustments are subject to the fund’s financial affordability at the time of review. In the context of the current low-inflation environment, the granted increase is fully aligned to the applicable inflation measure and exceeds the 75% of CPI base increase provided for in the GEP Law and Rules,” stated the GEPF.

Pensioners who retired on or before 1 April 2025 are to receive a 3.5% increase, meaning that for every R1 000 of pension received in the previous year, the pensioner will now receive an additional R35.

Only a partial increase for those who retired after 1 April 2025

However, pensioners who retired after 1 April 2025 are to receive a proportionate increase based on the number of months they have been in receipt of pension up to 31 March 2026.

This is common practice in pension administration to ensure that all pensioners are treated fairly and consistently, based on the time they have been drawing their pensions.

The GEPF explained that pension increases are designed to counteract inflation and maintain the purchasing power of pensions. “For individuals who have not been pensioners for the full year, the inflationary impact on their pensions would be less compared to those who have been receiving pensions for the entire year or longer. Therefore, their pension increase is adjusted accordingly to reflect the shorter duration of their pension receipt. This approach ensures fairness and equity in the adjustment of pension benefits, aligning the increase with the actual time during which the pensioner was in receipt of the pension.”

For example, a pensioner who went on pension on 1 November 2025 and receives a monthly pension of R5 000 would now receive R5 072.92 after the pension increase is granted. The increase is not equal to 3.5% because the pensioner retired after 1 April 2025. They have received five months (November to March) of pension payments, and so their increase percentage is 1.46% (3.5% / 12 = 0.29%, multiplied by the five months). The increased pension for this pensioner is therefore R5 072.92 and not R5 175 (which would have reflected the 3.5% increase awarded to those who have been on pension for longer than a year).