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.
