Pension’s asset base strengthens
Revaluation of investment property and quoted equities in response to currency reforms and inflation saw an 843 % increase in the pensions total asset base in the half year to June 2020.
The two asset classes increased by 1 263.41% and 657,10% respectively while the total asset base of the industry increased to $66,41 billion as at 30 June 2020, up from $7,04 billion reported as at 30 June 2019.
Insurance and Pensions Commission H1 2020 pensions report the industry is heavily invested in investment property and quoted equities (totalling $50.89 billion) which are viewed as value preserving and a hedge against inflation.
Ipec noted that funds’ value of investments in equities and investment property has been increasing in absolute terms.
During the period, investment Property and Quoted Equities had a combined value of $50,89 billion, accounting for 76,63% of total industry assets.
The industry also recorded an increase in nominal value of prescribed assets to $4,72 billion as at 30 June 2020 from $0,51 billion as at 30 June 2019.
But Ipec said notwithstanding the increase compliance was still low at 7,11 % against the regulatory minimum of 20%.
“Total income for the industry for the period under review was $29.55 billion compared to $1.35 billion for the same period in 2019.The income was driven by fair value gains which constituted 63.96% of total income and interest from investments, which constituted 22.65%.
1.7 Total industry expenditures for the period under review amounted to $965.28 million, of which $481.71 million was for pension benefit payments.” Ipec said.
Administrative expenditures amounted to $332,59 million, resulting in average expenses to total income ratio of 1,13% compared to 3,75% reported as at 30 June 2019.
Notwithstanding the improvement in the expenses to income ratio, Ipec noted that the administration expenses to total realized income ratio for June 2020 remained high at 3.12%.
The pensions industry had 960 registered funds as at 30 June 2020, of which 919 were defined contribution schemes whilst 41 were defined benefit schemes.
Total membership, excluding beneficiaries was 892 240 as at 30 June 2020, having risen from 798 400 as at 30 June 2019.