Online Reporter
Nelson Gahadza
The Insurance and Pensions Commission (IPEC) approved prescribed asset instruments valued at US$199 million in the first quarter of 2025, offering pension funds opportunities for investment portfolio diversification.
Prescribed asset instruments are financial assets, like bonds or securities, that governments require certain institutional investors, such as pension funds, to hold as part of their investment portfolios.
While the instruments are typically issued by the Government, local authorities, or quasi-government organisations, they can also be granted to specific or key private sector projects, like infrastructure or renewable energy initiatives, to encourage investment in those areas.
According to IPEC’s 2025 first quarter pensions report, approved prescribed assets offer an opportunity for investment portfolio diversification while promoting investments in projects that support national growth and align with the National Development Strategy 1 (NDS1).
“Consequently, the commission continues to encourage pension funds to invest in projects or products with prescribed asset status to meet the regulatory minimum requirement of 20 percent of total assets.
“While due diligence is conducted during the appraisal of prescribed asset applications, the ultimate responsibility lies with pension funds to carry out thorough due diligence before investing pensioners’ funds in such projects,” reads the report.
IPEC added that ongoing monitoring of project performance in line with agreed investment terms remains crucial.
According to the report, the Old Mutual Life Assurance Company (OMLAC) had the highest figure of approved prescribed assets at US$109,3 million, the purpose of which is the creation of a developmental Real Estate Investment Trust (OMLAC DREIT).
Other significant prescribed assets approved during the quarter under review include the AFC Agrobills valued at US$33,6 million for agriculture-winter cropping, Empower Bank housing bills worth US$14,4 million for housing project construction and Zimgold Commercial Paper (US$10 million for working capital).
The Vakayi Capital prescribed asset instrument valued at US$10 million and Zimbabwe Women Microfinance Bank’s — US$10 million for bank recapitalisation were also approved.
IPEC Commissioner Dr Grace Muradzikwa, speaking at a recent annual general meeting, said the insurance and pensions industry was participating in the funding of several projects being implemented across the country.
“Just to appreciate the pipeline of projects that the insurance industry is currently participating in, without the insurance industry, there would be no Harare, as about 70 percent of the buildings in the capital are owned by pensions and insurance companies.
“When you look at the projects that are currently coming up — the hotels, malls, and student housing accommodations — these are being funded by insurance and pension funds,” she said.
In the quarter under review, the pension sector’s assets were concentrated in investment properties, quoted equities, and prescribed assets, which together made up 76 percent of the total asset portfolio.
The report shows that prescribed assets increased by 6 percent, rising from US$264,4 million as at December 31, 2024 to US$280 million as at the reporting date.
“The growth was driven by revaluation gains and new investments in the approved assets. Notwithstanding the surge, prescribed assets accounted for only 11,27 percent of total sector assets as of March 31, 2025, still below the minimum regulatory requirements of 20 percent, though up from 11 percent in the previous quarter,” the report continued.
IPEC said that to meet the required minimum threshold, the sector is encouraged to invest in a range of instruments granted prescribed asset status.
