Grace Muradzikwa: IPEC commissioner
Only 52,29% of insured funds administered active: IPEC
HARARE, OF the total 897 pension’s funds under administration, only 469 are active, representing 52,29% of the total insured funds administered.
According to the Insurance and Pensions Commission (Ipec) report for the quarter ended 31 March 2019, the high number of inactive funds was mainly due to some sponsoring employers failing to contribute to pension funds since 2009, owing to viability challenges.
There were 900 insured pension funds as at 31 March 2019, decreasing from 913 funds as at 31 December 2018. The decline was mainly due to the dissolution of some pension funds by Old Mutual Life Assurance Company.
Membership
Membership for insured pension funds declined to 339,660 as at 31 March 2019 from 345,094 members reported as at 31 December 2018. The decline in membership was mainly due to dissolution of some funds as well as exits totaling 6,849 for the quarter under review.
Asset Quality
Insured funds reported assets totalling $1.51 billion as at 31 March 2019, constituting 27.98% of the industry’s total assets. The asset base as at 31 March 2019 translated to an average capital accumulation of $4,432 per member. The asset base as at 31 March 2019 reflected a 13.53% increase from $1.33 billion as at 31 December 2018. The increase in the asset base was mainly due to an increase in prescribed asset investments from $76.99 million to $165.06 million and an increase in investment property from $199.20 million as at 31 December 2018 to $255.45 million as at 31 March 2019.
As at 31 March 2019, equities and investment property accounted for a combined total of $1.16 billion, constituting 76.84% of the total asset base. The balance of $0.35 billion, representing 23.16% of insured funds’ total assets was invested in various other asset classes.
As depicted in figure 4 above, investments in prescribed assets was $165.01 million, constituting 10.97% of the sector’s total assets as at 31 March 2019. The ratio was below the regulatory minimum of 20%.
Earnings
Earnings Insured schemes reported a surplus of $71.26 million for the 3 months ended 31 March 2019. The surplus was driven by total income of $92.26 million. Fair value gains accounted for $63.06 million, attributable to 68.35% of the total income for the period under review. The total income was higher than the $47.89 million reported for the same period in 2018 owing to the relatively higher fair value gains for the 3 months ended 31 March 2019.
Total expenditure amounted to $21.00 million for the period under review. The expenditure was composed of pension benefits totalling $18.78 million and total administrative expenditure totalling $2.21 million. The total expenditure for the period under review was higher than the $16.04 million reported for the same period during 2018. The higher total expenditure was on account of higher pension benefit costs for the 3 months ended 31 March 2019, that increased from $14.87 million for the same period in 2018.
The average expense ratios for the period under review were 7.43% and 2.15% to contributions and total income respectively, compared to 6.11% and 3.18% for the same period in 2018.
