eBusiness Weekly
Tawanda Musarurwa
Local pension funds reported a surplus of $8,99 billion for the year ended December 31, 2019, compared to the $1,39 billion surplus reported over the same period in 2018.
“This was on account of an increase in total income amounting to $9,59 billion for the 12 months ending December 31, 2019, compared to $1,8 billion for the same period in 2018,” said the regulator, the Insurance and Pensions Commission (IPEC).
Income for the period under review was driven by interest from investments and fair value gains amounting to $8,01 billion. The fair value gains were mainly due to the revaluation of investment properties coupled with the bull run on the ZSE during the period under review.
Total expenditure increased from $409,64 million for 2018 to $599,45 million for the same period in 2019.
“The increase was mainly due to an increase in total benefits paid, from $287,51 million in 2018 to $416,14 million in 2019,” said IPEC.
Expenses to contributions ratio was 27,28 percent whilst the expenses to total income ratio was 1,97 percent for the year ended 31 December 2019, compared to 21,8 percent and 5,17 percent in 2018, respectively.
Meanwhile, data from the latest Insurance and Pensions Commission (IPEC) Fourth Quarter (2019) report show that the local pensions industry’s investments continued to be skewed towards equities and investment property accounting for 79,19 percent of total industry assets as at the end of the year.
The two asset classes accounted for $12,99 billion.
Pensions’ investments on the ZSE were however defied the odds.
“The funds’ quoted equities investment increased by 44,71 percent from $3,71 billion as at 30 September 2019 to $5,37 billion as at 31 December 2019, on account of an increase in the values of shares on the Zimbabwe Stock Exchange,” said IPEC.
Despite the increases on the part of pension funds’ investments, the local bourse witnessed negative real returns on all counters albeit a generally bullish trend.
“The introduction of currency reforms was characterised by disinvestments by some foreign investors.
“Equities are generally regarded as value preserving instruments ahead of money market instruments,” said the regulator.
“However, the real returns on the ZSE were mainly on the negative side during the year thereby weighing down investment appetite. In this regard, ZSE institutional investors the bulk of whom are insurance companies and pension funds had negative returns from such investments.”
