Positive investment returns drives Mining Industries Pension Fund (MIPF) funding level to 77.5% in 2017

Positive investment returns drives Mining Industries Pension Fund (MIPF) funding level to 77.5% in 2017

By Insurance24

HARARE, Funding level for the Mining Industries Pension Funds’ (Miff) improved to 77.5% in 2017 compared to 58.1% in 2016 with the growth largely attributed to a positive investment  returns achieved on the assets of the fund during the year.

The Pension fund in a circular to Mines said the Actuarial Valuation as at 31 December 2017 showed that on a going concern basis, the funding level compared favorably with the minimum funding level of 75% recommended by IPEC.

“The improvement in the funding level was attributed to positive investment returns achieved on the assets of the Fund during 2017. The fund will continue to explore ways of improving its performance in order to achieve a funding level of 100%,” said the Fund.

The actuary  determined the investment  return to be 47,7%  against a year on year  inflation  of 3,46%
As a result  the actuary noted that of the  47,7 %  return on investment only  4,4% was realized  returns while the balance 43,3% was unrealized.

“Despite the positive performance in investments, market conditions remained volatile,” said MIPF. Unrealized returns refer to gains achieved from the re-rating of the Funds assets upwards as a result of market fluctuations. Realized returns on the other hand refer to the actual returns earned on the Fund’s investments.

“Given   the need  for the fund  to return to fully  funded position (100%) and the market fluctuations the trustees   considered it prudent not to declare a bonus to all membership categories  in 2017.The additional  death benefit  which is  payable  as a funeral assistance upon death,” noted MIpf.

Meanwhile the fund is finalizing the implementation of a new pension’s administration system which is expected to go live before the end of 2018.

“The new system is expected to improve operational    efficiency  .One of  the  main improvements of the new system   is that it will  be able to accrue benefits based on    on actual  contribution received compared to the current system which accumulates  benefits for members based on invoiced  contributions,’ Mipf.

This will see all members receiving their annual benefits statement despite their employer’s contribution status beginning 2019.