Pensions industry assets up 34% in Q3 – IPEC
Harare, (New Ziana) – The value of assets owned by Zimbabwe’s pension funds increased 34.23 percent to $9.45 billion in the quarter ending September 30, 2019 compared to the previous quarter, latest industry data released on Friday shows.
The spike, from $7.04 billion in the previous quarter, was due to revaluation of asset values following Zimbabwe’s currency reforms this year which saw the country move from use of multi-currencies to local currency, according to the Insurance Pensions Commission (IPEC).
“The increase was mainly driven by a spike in the values of investment property and equities. The increase in investment property was mainly on account of revaluations of property values from US$ to ZWL$ following currency reforms,” the commission said.
The industry regulator, however, raised a red flag on the concentration of asset portfolios in properties and equities, as well as a tendency by players in the sector of buying properties from sponsoring employers, who then took long to legally transfer ownership to the pension funds.
“As at 30 September 2019, the two real asset classes accounted for 76.48% of the industry’s total asset base,” IPEC said.
On delays in asset ownership transfers, the regulator said: “This increases the risk that pension fund assets may be used to settle liabilities of the sponsoring employer, in the event that the employer is successfully sued for defaulting on debts.”
Without naming the player, IPEC said one pension fund had lost 80 percent of its assets, when the sponsoring employer went under liquidation as a result of the practise.
At the close of the quarter, there were 1 094 registered occupational pension funds, with a total membership of 798 828, up from 798 400 recorded.
Arrears in pension benefits increased from $77.77 million as at 30 June 2019 to $87.07 million as at 30 September 2019, while unclaimed benefit liabilities marginally declined from $33.75 million to $32.44 million.
In the nine months to September, the industry’s total income was $2.69 billion, which was up on earnings for the same period last year.
“The marked increase in income was driven by fair value gains and profit on disposal of assets totalling $1.01 billion and $868.30 million respectively,” IPEC said.
Total industry expenditures stood at $341.84 million, resulting in a financial surplus of $2.34 billion.