Arrear pension benefits rise 100% in Q3, 2019

Arrear pension benefits rise 100% in Q3, 2019

Staff Writer

The Insurance and Pensions Commission (Ipec) says the arrear pension benefits have shot up 100% to $87, 07 million in Q3 2019 from $77,77 million in half year 20 19 while  unclaimed benefit liabilities marginally declined $32,44 million in the comparable period.

In its Q3 pension’s industry report, Ipec said the increase in the arrear pension benefits may be due to revaluations of benefits pertaining to the members.

“Arrear pension benefits increased from $ 71.54 million as at 30 June 2019, to $82.03 million as at 30 September 2019. It was of concern to the Commission that the $82.03 million was mainly emanating from two pension funds which have high levels of contribution arrears and relatively large investments in property,” read the report.

One of the funds had arrear pension benefits totaling $64.47 million. Unclaimed benefits totaled $19.81 million as at 30 September 2019, decreasing from $29.90 million as at 30 June 2019. The decline was on account of one fund, which reduced its unclaimed benefit liabilities from $10.45 million as at 30 June 2019 to $271,524 due to a reporting error,” said Ipec.

During the period, the industry had a total asset base of $9.45 billion having increased by 34.23% from $7.04 billion as at 30 June 2019 driven by a spike in the values of investment property and equities.

The increase in investment property was mainly on account of revaluations of property values from US$ to ZWL$ following currency reforms.

“The two asset classes totaled $7.21 billion, accounting for 76.48% of total industry assets, consequently, these asset classes continued to be the major investment classes as the industry seeks to preserve long-term value by hedging against inflation,” said Ipec

On the other hand, investments in prescribed assets increased from $510.62 million as at 30 June 2019 to $722.12 million as at 30 September 2019 accounting for 7.64% of total pensions industry assets, which is below the 10% regulatory minimum.

Total industry income stood at $2.69 billion for the nine (9) months ended 30 September 2019 compared to $55.64 million for the same period in 2018.

This was driven by fair value gains and profit on disposal of assets totaling $1.01 billion and $868.30 million respectively.

Total industry expenditures for the nine (9) months were $341.84 million, resulting in a financial surplus of $2.34 billion.

Administrative expenses for the period under review were $106.73 compared to $63.56 million for the comparative period in 2018. The main drivers of the expenses were administration, investment, staff and property maintenance.

These expenses resulted in average expenses to total income ratio of 3.68% compared to a ratio of 8.78% in 2018.