Pension funds play a significant role in retirement planning and the economy (Mosoahle & Idahosa 2018; Sanusi & Eita 2022). Pension funds are a crucial component of retirement planning as they collect contributions from members, invest funds on their behalf and pay out pension benefits once members stop working (Marumoagae 2016). A large number of individuals use pension funds to save for their retirement, with South Africa having over 5000 pension funds (FSCA 2020), 16.4 million members (BusinessTech 2022) and an investment growth rate year on year of 14% between 2007 and 2017 (Moleko & Ikhide 2017).

Pension funds allow members to access their money to meet their necessities at retirement (Marumoagae 2016). In South Africa, pension fund membership is compulsory for employees of a participating employer and the fund selection is limited to the investment funds offered by the pension fund. The members trust the fund will invest their money wisely for their future and retirement, whereas pension funds are often the members’ primary or only source of income once they retire. As pension funds make provisions for old age, their performance is crucial to the economy, highlighting the necessity for good pension fund management (George & Joubert 2007). South Africa has one of the continent’s most significant public pension funds, the Government Employees Pension Fund (GEPF), which is also considered to be among the most sizeable funds globally (based on assets under management) (FSCA 2020). The GEPF has more than 1.61 trillion assets and 1.2 million active members (GEPF 2019a). It is an occupational pension fund, and membership is mandatory for all employees (GEPF 2019a). Responsible pension fund management is essential considering the size and objectives of the GEPF and the fact that employees have no choice in their investment vehicle. Therefore, public responsibility should be above private interest in decision-making in the pension fund (Thomas 2014).

Members invest their capital in the GEPF and would like the fund to maximise their retirement savings. The challenge is when the people investing in the fund do not control or manage the fund (Hermalin 2013). This relates to the importance of corporate governance because of a separation of management and ownership, resulting in conflicting interests between the stakeholders and managers (Khan 2011). In recent years, the media reported mismanagement and governance concerns in the GEPF, which are not unique to the GEPF. It has also been reported by other state-owned companies in South Africa (Thabane & Snyman-Van Deventer 2018), which intensified members’ concerns towards public pension funds compared to private pension funds. Subsequently, with the increased reports on mismanagement, poor investment decisions and governance concerns, it has become increasingly difficult for fund members to have confidence in the management of the GEPF in South Africa. In 2019, a proposal was presented at the African National Congress (ANC)’s policy conference investigating the introduction of prescribed assets from the funds of financial institutions to invest in infrastructure, forcing the pensions and savings industry to invest in state-owned enterprises (Donnelly 2019). In the same year, President Cyril Ramaphosa was ordered by the Public Protector to take action against Public Enterprise Minister Pravin Gordhan for alleged constitutional violations, authorising a pension payout of the former South African Revenue Service (SARS) deputy commissioner Ivan Pillay from the GEPF. At the time, no statutory provision was entitling Mr Pillay to an early retirement with full pension benefits (Marrian 2019). In 2021, a new mandate between the GEPF and the Public Investment Corporation (PIC) was negotiated, where some of the investment and administration activities of the GEPF are outsourced to the PIC (GEPF 2019a). The mandate included consequence management for poor investments. The decision was made after a judicial inquiry that concentrated on the PIC’s Isibaya Fund. The judicial panel scrutinised the governance of the division and the disregard for investment protocols. After the judicial investigation, the PIC reported that the Isibaya Fund missed its annual investment target by 72% (Bloomberg 2021). In 2022, President Cyril Ramaphosa considered using the GEPF to assist in decreasing state power company Eskom’s debt. With over R380 billion in debt, Eskom has been dependent on the National Treasury for a significant portion of its debt service payments in recent years. Eskom is unable to borrow money to fund new developments because of its enormous debt load (Paton 2022). Strong criticism has been directed at the suggestion of using the GEPF as a strategy to save Eskom, which has been regarded as a bad investment (Bloomberg 2020; Omarjee 2019). Another report on poor investment decisions was published in 2023, stating that the PIC was still attempting to recover an R4.3 billion investment in Ayo Technology in 2017 with claims that Ayo allegedly fabricated important information and that due process was not followed (Moodley 2023). In addition to the above, media reports revealed corruption among pension funds (Marrian 2019), misuse of funds invested by PIC (Fredericks 2019), delayed payment of benefits and contributions to pensioners and undue pressure from senior politicians to finance their business ventures (AIDC 2019). These adverse reports could significantly impact members’ confidence in fund management and make them question the fund’s growth potential and retirement security. Furthermore, the investment in the fund is compulsory, where members cannot withdraw their accumulated savings and invest in another pension fund while employed by the government institution. As a result of a lack of members’ confidence, financial planners have faced questions from members about resigning compared to the retirement of retirees because of their mistrust of the GEPF (Fisher-French 2021; Glacier n.d.; Macpherson 2015).

Subsequently, members fear that their returns might not be optimised because of a potential misalignment between their goals and those of the fund management (Hermalin 2013). Concerns regarding corporate governance, especially those arising when investors (members of the GEPF) and controlling entities (fund management) are different, have long persisted (Hermalin 2013). To address these concerns, establishing diverse mechanisms that limit the actions of controlling entities to better align with their interests is necessary. In essence, it requires implementing a governance framework within the organisation. Reporting corporate governance in organisations and companies is essential, especially in the interest of the stakeholders. Corporate governance revolves around protecting the interests of investors (members of pension funds) in situations where they do not hold complete control over the organisation (Hermalin 2013). Corporate governance can be described as the cornerstone of an organisation and effectively ensures a robust risk management system. Therefore, this article provides a starting point to evaluate the reporting of corporate governance principles within the GEPF annual reports. The first objective is to establish a sound theoretical checklist framework for corporate governance through a critical review of the literature. The second objective is to evaluate whether the GEPF discloses the corporate governance principles (from the framework) in the annual report. A qualitative approach was followed, and a content analysis was performed to determine how corporate governance is disclosed in the annual reports.

The study follows a qualitative content analysis to investigate and examine the reporting of corporate governance in the GEPF in South Africa. A content analysis approach compares and analyses the information obtained through the annual reports (Baxter 2020). The content analysis involves breaking down texts into smaller units such as single words, sentences, phrases or paragraphs, making sense of recorded human communication through the annual reports (Auriacombe 2007; Baxter 2020). Subsequently, the annual reports were collected, and the reports were used to break down text into smaller units to identify words, sentences and patterns.

The content analysis involved two elements in organising the data: units of meaning and a set of categories or criteria. The information from the annual reports was organised in a unit of meaning referring to each principle in the framework. The collection of categories refers to how it was reported in the criteria of full disclosure, partial disclosure or no disclosure. The corporate governance framework was applied to each principle individually to assess its consistency and continuous presence of corporate governance over 5 years. The checklist’s questions were divided into separate sections for each principle: (1) Leadership, ethics and corporate citizenship; (2) strategy, performance, and reporting; (3) governing structures and delegation; (4) governance Functional areas and (5) stakeholder relationship. All 5 years were examined individually and collectively to obtain a holistic view of corporate governance over the 5 years and assess how corporate governance has been implemented overall over the 5 years. The findings are presented in a tabular format after the years have been consolidated. The annual reports of the GEPF from 2017 to 2021 were investigated against each principle and not referenced again when discussed unless referred to specific information only relevant to a selected year. Suppose Table notes are listed in a particular disclosure category (criteria of disclosure). In that case, it means that corporate governance was either fully disclosed, not disclosed, or partly disclosed for specific years, contrary to the other years as indicated in the Table notes. If the disclosure category was the same for all 5 years for a particular key area of disclosure, it was marked once without a Table note.

The corporate governance framework presents results from 2017 to 2021 based on the information disclosed in the annual reports. The study has marked off the results as fully disclosed, partly disclosed and not disclosed.

Table 3 indicates the key area of disclosure with an ‘x’ for the disclosure criteria of all 5 years if no Table note is included. This shows that the disclosure criteria were the same for all 5 years for the specific key area of disclosure. The only exception was principle 12, where the key areas of disclosure were fully disclosed for 3 years and partly disclosed for 2 years. The area of disclosure for the rest of the principles was the same for each 5 years.

The majority of the corporate governance principles have been considered and disclosed by the GEPF’s annual reports, which also report how the fund is managed. Before the release of King IV in 2016, King III served as the fund’s guiding principle; as a result, the GEPF continued to report on corporate governance through the guidance of King IV. Although King IV was introduced in 2016, the annual reports of the GEPF discussed King IV in the annual reports in 2017. The fund has made no efforts to improve corporate governance for areas that have been partially disclosed since 2017. Only a shift was noted for principle 12, which was previously partially disclosed and fully disclosed from 2019 onwards.

A summary of the disclosure criteria of the corporate governance principles in the annual reports of the GEPF is presented in Figure 1.

In the past 5 years, the GEPF disclosed the principles of King IV. The principles were disclosed in designated sections in the annual reports, and evidence was provided for each. Twelve out of 17 principles of King IV were fully disclosed. For various studies, various disclosure outcomes are acceptable and appropriate (Mans-Kemp et al. 2016; Moloi 2008, 2015). Tsipouri and Zanthakis (2004) found that 70% of disclosure was reasonably satisfactory; however, they applied a different rating. Therefore, in relation to this study, 12 of 17 principles (71%) is a fairly satisfactory outcome. The findings suggest that the GEPF tries to adhere to laws and rules supporting good corporate governance.

For Principle 5 (Performance), in 2021, the fund value increased by 27.5%, and supporting information was provided to demonstrate the fund’s increase. This is relevant information for fund members regarding their concerns about the fund’s performance and their retirement benefits, especially in line with the media reports on poor investment decisions. Principle 7 (Composition of the governing body) was fully disclosed in the annual reports of the GEPF; board trustees one (1) and seven (7) have the necessary skills, experience, and knowledge to achieve their roles. Board trustee one (1) has a PhD, and seven (7) has a master’s degree. Disclosure of board members is essential for the members as the board holds decision-making authority and significantly impacts the fund’s direction and strategy. Principle 8 (Committees of the governing body) was fully disclosed, and complete details of the roles and responsibilities of committees were provided. For instance, board trustee two (2) attended all meetings for three committees, which were all detailed in the annual report. Furthermore, the Benefits and Administration Committee has proposed the creation of a complaints-handling office, the Government Employees Pension Ombud (GEPO), to the board for approval (GEPF 2020). The GEPO will be valuable to the members as it will provide a platform for them to discuss any problems or complaints. Principle 14 (Remuneration governance) encourages fair, responsible and transparent remuneration. The annual reports offered in-depth information about the individuals accountable for remuneration governance, their responsibilities and their ongoing efforts to ensure proper remuneration governance. From the findings, it seems the fund considers its members’ best interests when making decisions, backed by data from the risk management division. In addition, the fund must monitor and report any fraud within the PIC. These disclosures provide fund members with information about measures in place related to the media reports and concerns about political influence and questioning investing decisions. In addition, the Exco meetings always include fraud risk management as a standing agenda item in their meetings (GEPF 2020).

From 2017 to 2021, four principles were partly disclosed: Principle 1 (Effective and ethical leadership), Principle 3 (Responsible corporate citizenship), Principle 9 (Evaluations of the performance of the governing body) and Principle 15 (Assurance). The fund is encouraged to disclose its principles fully in the future. When it comes to Principle 1 (Effective and ethical leadership), even though leadership was partially disclosed, the fund has good values, which include transparency, integrity, accountability, client-centricity and innovation (GEPF 2020). Some of the values form part of the essential objectives of corporate governance (Wiese 2017). It is suggested that the fund must improve its leadership so that it can be fully disclosed. Principle 9 (Evaluations of the performance of the governing body) was partly disclosed. Stakeholders require detailed information on performance evaluation as this information is essential, as the governing body’s performance may affect the fund as a whole.

In 2017 and 2018, Principle 12 (Technology and information governance) was partly disclosed; however, from 2019 to 2021, it was fully disclosed. The publication of the King IV principles in 2016 might have been a contributing factor to this change. Several factors may have contributed to this change, but the fund attempted to adhere to the King IV principles, which were released in 2016. This effort also impacted the fund’s endeavours to improve information governance and technology, as doing so would benefit the fund’s members, pensioners, beneficiaries and the fund itself. Members can easily access their personal information using the self-service system, first implemented in 2021. The fund upgraded its IT governance structure in 2019 to ensure that information and technology are regulated to support the business objectives. The members will benefit as the fund fully discloses information about its technology and information governance. The fund has improved information governance and used more technologically advanced governance to better communicate with its members while finding innovative ways to protect members and fund information. As technological governance is necessary to guarantee that the pension fund’s data is always protected, focusing on it within the fund is required to achieve its objectives. Additionally, information governance protects and continuously monitors the fund’s and members’ private information. Ensuring technology and information governance may reduce any risks within the fund that could jeopardise the fund from achieving its objectives.

The GEPF might not seem trustworthy based on the news reports. However, discussing corporate governance principles and disclosing crucial information can increase trust and confidence in the GEPF. Based on the investigation, the researcher has not identified any principles that are not disclosed; they have discovered principles that are fully disclosed, partly disclosed or both fully and partially disclosed, as was previously stated. It seems as if the GEPF is trying to adhere to the King IV corporate governance principles. Even though the fund’s daily operations are not made public, most of the fund’s annual reports have discussed King IV’s principles. In some of those reports, evidence of the principles’ application has also been given.

In summary, a content analysis was conducted using annual reports, where the findings revealed that the annual reports of the GEPF report on the majority of the corporate governance principles established in the framework of the King IV principles. A framework checklist was used to identify relevant sections, and a checklist was used to examine annual reports. The research revealed that the fund disclosed 71% of the King IV principles with room for improvement. Reporting on corporate governance principles is the starting point where there are claims of conflict of interest, misappropriation and suspicious investment decisions. However, many international corporate scandals misled investors despite presenting seemingly credible annual reports (Abid & Ahmed 2014). Further investigation into the governance practices is suggested for future research.

The research has identified that the GEPF has met the majority requirements and principles of King IV, which may increase members’ trust in the fund and their level of confidence. Examining the disclosures in the GEPF annual reports was based on corporate governance principles. The fund has been reporting many King IV principles in its annual reports from 2017 to 2021. It should be highlighted that the examination was based on the information disclosed in the annual reports rather than on how these principles were applied or carried out in practice.

Considering the media reports questioning the regulations and management of the fund, the findings indicate that the GEPF annual reports disclose that the fund operates ethically, effectively and fairly and has applied 12 out of 17 King IV principles. It is evident from the findings that the information presented by the media is not aligned, which supports further investigation into the fund’s day-to-day operation and decision-making. It also emphasises the importance of fund members reading the annual reports and any other significant documentation of the fund. However, only considering the King IV principles does not provide sufficient clarity on the identified claims, particularly from a financial point of view. Further exploration and investigation of the fund’s financial statements and other relevant financial documents are encouraged. Therefore, further research is encouraged to review the fund’s investment decisions and financial allocation.