Funds reel under arrears

Harare Bureau
THE liquidity challenges gripping the country negatively affected returns for pension funds in the fourth quarter of 2013. According to a report by the Insurance and Pension commission for the quarter ended December 31, 2013, contribution arrears grew significantly from the previous year.

The report is based on returns submitted by 15 standalone funds, 4 fund administrators and 4 life assurers. Self-administered funds reported a 38 percent growth in contributions to close the year at $392 million from $284 million in the previous year.

However, 43 percent or $170 million of the total contributions were in arrears, an increase from $122 million in 2012.
Standalone funds registered contributions arrears of $124 million or 58 percent up from $100 million previously.

Insurers’ contribution arrears closed the year 2013 at $21 million or 30 percent of total contributions while fund administrators’ arrears stood at $25 million or 23 percent of total contributions from $11 million in the previous year.

“Employers attribute (the arrears) to liquidity challenges in the economy . . . The Commission closely monitors this challenge on a quarterly basis and payment plans pledged by players with a view to mitigate same,” the report said.

The report said the four fund administrators reported total fund membership of 81,000.
Membership for standalone funds rose by 25 percent to 360,000 partly due to previously errant funds submitting their quarterly returns. Insurer self-administered funds had a total fund membership of 309,000 from 21,000, a 43 percent growth from the previous year. Fund administrators reported total fund membership of 81,000.

Total pension fund assets grew from $1,5 billion reported previously to $1,8 billion at year end. Of this amount, standalone funds’ assets contributed 62 percent of the total assets at $1 billion while fund administrators had 24 percent of the assets valued at $434 million. Insurer-administered funds contributed 14 percent of the total assets worth $255 million.

Invested assets for all pension funds were staggered in properties, equities, money markets and other assets.
The report said pension funds invested 2 percent of their funds on prescribed paper but compliancy levels are expected to firm to 10 percent as paper availability improves.