NSSA on-boards CSD as Business Partner….Insurer, First Mutual Dematerialization Ratio at 91%

NSSA on-boards CSD as Business Partner….Insurer, First Mutual Dematerialization Ratio at 91%

By Insurance24

HARARE, The National Social Security Authority (NSSA) has became the first self-administered pension fund to be on-boarded as a Central Securities Depository (CSD) Business Partner.

The CSD Business Partner product is targeted at self-administered pension funds and other qualifying organizations allows such organizations to connect directly to the CSD without using another Participant such as a stockbroker or Custodian.

“The intention is to reduce the number of organizations in the CSD value chain and allow Business Partners to access the CSD services at a lower cost compared to when they use another Participant,” said Chengetedzai Depository Company (CDC) in an update.

According to CDC, the CSD Business Partner product is expected to increase the levels of dematerialization in the market by allowing some large institutional investors to dematerialize their portfolios and still enjoy reasonable safe custody costs.

As at March 2018, the average Demat ratio across all counters stood at 39.8%. However, CDC expects the dematerialization statistics to improve significantly with the on-boarding of the National Social Security Authority (NSSA) as a CSD Business Partner.

Total contributions for self-administered pension funds surged 8 percent to $536.8 mln in FY2016, compared to $496.7 mln realized in the prior year. Data from the Insurance and Pension Commission (IPEC) show that arrear contributions have also increased from $311.2 mln in 2015 to $350.7 mln last year.

Arrears contribution for fund administrators increased 22 percent, with standalone funds also registering a 16 percent jump. Only insurer administered funds registered a decline in arrear contributions of 13 percent with the major challenges for the industry continuing to be arrear contributions, high expense ratios, low benefits in general.

Meanwhile, Insurer First Mutual Holdings Limited (FMHL) a demat ratio of 91% and stands second from Riozim which has the highest demat ratio at 94%.

Other insurers Nicoz diamond is at 84%, Old Mutual 69% and Fidelity Life Assurance at 51%.