Pensions industry total income surges to $722m in2017
HARARE – The pensions industry’s total income for the year ended 31 December 2017 totalled $722.47 million; with contributions and fair values gains in equity amounting to $398.76 million and $139.08 million, respectively, a report released by the Insurance and Pensions Commission (Ipec) shows.
In its pensions report for the period under review, Ipec said the two income streams contributed a combined 74.44 percent of total income with total expenditure amounting to $296.07 million, resulting in a net surplus of $426.70 million. According to the report, total benefits incurred amounted to $233.94 million, translating to 75.64 percent of total expenditure incurred during the reporting period.
The pensions industry reported total administration expenses of $72.13 million; with the administration expenses translating to an average expense ratio of 15.59 percent and 8.37 percent based on total contributions and total income respectively. The Commission says that the expense ratios were high and it will come up with a policy position to address the high expense ratios.
Total assets for the industry totalled $4.03 billion as at 31 December 2017, reflecting a 6.5% decrease from the $4.31 billion reported as at 30 September 2017. The decline in total assets was attributed to a shrinkage in equity investments from $1.83 billion as at 30 September 2017, to $1.46 billion as at 31 December 2017.
“The shrinkage in equity investment was mainly a result of the decrease in equity prices on the Zimbabwe Stock Exchange during the quarter under review, which followed after the “bull run” that took place during the third quarter,” said Ipec in the report.
The industry’s liabilities were mainly composed of reserves and provision for members’ benefits, which totalled a combined $3.83 billion, attributable to 95.04 percent of the $4.03 billion total liabilities for the industry as at 31 December 2017. The industry reported arrear pension benefits of $84.39 million as at 31 December 2017. The arrear pension benefits liabilities decreased from the $92.57 million reported as at 30 September 2017.
“The arrear pension benefits were mainly on account of contribution arrears and assets that are locked up in immovable property that are not readily available to meet pension benefits. Stand-alone funds accounted for 93.56 percent of the arrear pension benefits as at 31 December 2017.
“The arrear pension benefits for stand-alone funds was mainly attributable to three funds. The three funds had arrear pension benefits of $57.25 million, $19.01 million and $6.22 million respectively, attributable to 91.81 percent of the pensions industry’s total arrear pension benefits,” the report notes.
According to the report, insured schemes reported total income amounting to $177.82 million for the year ended 31 December 2017 on the back of contributions totalling $151.59 million, attributable to 85.25 percent of the total income for insured funds. Total expenditure including benefits for insured funds for the same period was $77.33 million, resulting in a surplus position of $100.49 million.
Self-administered funds also reported total income of $313.39 million during the period under review, with the total income mainly driven by contributions and fair value gains on equities. The two income streams accounted for a total of $196.49 million, attributable to 62.70 percent of the total income for the year ended 31 December 2017.
The total assets for self-administered pension funds however decreased by 12.98 percent from $1.62 billion reported as at 30 September 2017 to $1.41 billion as at 31 December 2017. According to Ipec, the decrease in the asset base for the sector was mainly due to a reduction in the value of equities investments from $960.81 million as at 30 September 2017 to $731.14 million as at 31 December 2017. The decline noted to be as a result of the downward spiral on the Zimbabwe Stock Exchange during the quarter under review.
Meanwhile, stand-alone self-administered funds reported total income of $231.27 million for the year ended 31 December 2017, thanks to contributions and rental income which accounted for a combined 77.46 percent of the total income. FINX
