Construction Industry Pension Fund records $3,2 mln surplus in 2017

Construction Industry Pension Fund records $3,2 mln surplus in 2017

HARARE, Construction Industry Pension Fund which recorded a surplus of $3,2 mln in 2017, says will increase pensions payouts backdated 1 January 2018 by 10% while declaring interest of 9% p.a. and a bonus of 4% for 2017.
According to a recent actuarial valuation for the fund prepared by Pentact Private limited for the year ended December 31 2017,the fund had a surplus position of US$3 2424 000.

This was before adjusting before adjusting loading, reserves, interest and bonus for 2017 and a pension increase as at 1 January 2018.

“The Trustees have decided that the surplus should be utilized to increase pensions by 10% with effect from 1 January 2018 while

declaring interest of 9% p.a. and a bonus of 4% for 2017.The Fund will therefore be in a fully funded position as at 31 December 2017 with reserves being increased to 4.58% of the market value of the assets’’
For the present we have assumed that the loadings and the mortality and expense reserves mentioned in this report are not amended.

We have also assumed that the Trustees will wish to maintain the simple 5% differential between the interest declared on withdrawal and minimum benefits and the bonus awarded to deferred pensions and increase awarded to pensions in payment while varying the level of reserve and maintaining a fully funded position,” read the report.
Should the asset reserve be maintained at 0.08% of the value of the assets the maximum interest which could be awarded is 14.0% p.a. with a bonus of 9% to deferred pensions and a pension increase of 9% with effect from 1 January 2018.

However the consultant sad this will leave the Fund in a very weak position and we would strongly recommended that the fund increased its reserves.

The report goes on to say there still exists some uncertainty regarding all the pre-dollarisation and 2009 data and hence the value of the liabilities.

During the period the percentage of the assets represented by the Stoneridge project has decreased from 15.3% to 11.9% of the market value of the Fund while the income from this investment has risen from 5.4% to 13.3% of investment income for the year.

“This is as expected as a result of stands being sold, however the figure under sundry debtors for Stoneridge stands receivables has risen from $0 to $1,833,822. We have been advised that these debts are backed by the actual Stoneridge properties,” noted the report.

Outstanding contributions for the fund rose from $31,930 to $2,336,185 during the year.

Prior to 1 October 2016 the task of collecting contributions and establishing debtors was outsourced and the results were inconclusive.