Equities investments buoys Pensions industry base in H1, 2018
HARARE, Pensions industry asset base increased 5,2% to $4,38 billion in the 6 months to June 30 2018 from $4.16 billion in Q1 2018 driven by an increase in the value of quoted equities $1.60 billion in H1 from $1.38 billion Q1 2018.
Insurance and Ipec commissions’ (IPEC) H1 report shows that the total assets translated to an industry average capital accumulation per member of $7,487 which was 5.73% higher than the $7,081 per member in Q1 2018.
This was driven increase in total assets. During the period equities and investment properties totaling $2.81 billion accounted for 63.97% of the total assets.
Prescribed assets amounted to $323.13 million as at 30 June 2018 from $306.93 million reported as at 31 March 2018 constituting 7.37% of total assets, which was not complaint with the minimum regulatory requirement of 10%.
Ipec said it however noted that self-administered pension funds were compliant with the 10% regulatory threshold. Stand-alone and insured pension funds are encouraged to comply
“The industry continued to be plagued by contribution arrears, which increased from $618.88 million as at 31 March 2018, to 636.36 million as at 30 June 2018. Contribution arrears accounted for 14.51% of the industry’s asset base. Stand-alone funds reported $502.53 million of the contribution arrears, accounting for 78.97% of total contribution arrears.
The high level of contribution arrears reduce the level of investible assets for funds and heighten the liquidity risk in industry. The Commission continues to be attentive to developments on the matter,” said Ipec.
Meanwhile, the industry’s total liabilities recorded a deficit of $221.46 million after it totaled $4.61 billion as at 30 June 2018 buoyed by defined benefit liabilities which were not being supported by the requisite investment returns and sponsoring employer funding.
Pension benefits arrears stood at $83.97 million during the period while benefit arrears increased by 5.41% from the $79.66 million in Q1 2018.
Stand-alone funds accounted for 93.46% of the pension benefit arrears as at 30 June 2018 while unclaimed benefit liabilities stood at $28,73 million.
“The arrear pension benefits for the sector were mainly a result of low liquidity emanating from contribution arrears and investments in properties that cannot be readily converted into cash to meet pension benefits.”
