Self-Administered Pension Fund partners CDC
By Insurance24
HARARE, A self-administered pension fund is set to on-board a product on the Central Securities Depository (CSD) trading system this month, becoming a second partner for Chengetedzai Depository Company (CDC) since its launch.
According to a CSD update seen by Insurance24, the CSD Business Partner product is targeted at self-administered pension funds and other qualifying organizations.
“CDC expects to on-board its second Business Partner in March 2018. The second Business Partner will become the first self-administered pension fund to become a Business Partner on the CSD,” said the Chief executive officer Campbell Musiiwa.
He said the CSD Business Partners can connect directly to the CSD without using another Participant such as a stockbroker or Custodian.
“The intention is 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,” he said.
The CEO added that 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.
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.
Arrear contributions for fund administrators increased by 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.
The Commission says that pension funds should always seek to meet fund objectives particularly pre-targeted income replacement ratios through better investment decisions, minimum cost structures and adhering to good corporate governance practices.
