Online Reporter
Tapiwanashe Mangwiro
ASSETS in the pensions sector grew by 6 percent to US$2,63 billion in the first half of 2025, underpinned by new investments and fair value gains, but the Insurance and Pensions Commission (IPEC) is concerned over continued underinvestment in prescribed assets, which remain well below the statutory minimum requirement.
According to the commission’s report for the half year ended June 30, 2025, the value of prescribed asset investments fell by 2 percent to US$274 million from US$280 million during the period.
This leaves the sector’s prescribed assets ratio at just 10,4 percent, far short of the 20 percent minimum threshold required by law.
Prescribed assets refer to approved investment instruments, often linked to infrastructure, housing and productive sectors, which pension funds are legally required to hold as part of their portfolios.
IPEC warned that the current compliance rate undermines the sector’s ability to contribute meaningfully to national development objectives under the National Development Strategy 1 (NDS1).
“The sector is encouraged to invest in a range of instruments accorded prescribed asset status to meet the required minimum threshold,” IPEC said in the report.
In the first half of 2025, the Ministry of Finance, Economic Development and Investment Promotion approved 11 new prescribed asset applications, including the AFC Agrobills worth US$33,6 million for winter cropping, Old Mutual Life Assurance Company Real Estate Investment Trust worth US$109,3 million for property development, EmpowerBank Housing Bills worth US$14,4 million and Gutu Solar Project worth US$3,77 million.
“These projects offer valuable opportunities for portfolio diversification while supporting national development,” IPEC noted.
Despite this, uptake has been low.
Many pension funds remain heavily concentrated in real estate and equities, citing limited liquidity, long maturity periods and perceived risk around some Government-backed instruments.
As of June 2025, the pensions industry’s asset base stood at ZiG70,76 billion (US$2,63 billion), up from US$2,48 billion in March.
The growth was driven primarily by new investments (4 percent of total assets) and positive fair value adjustments in property and equity holdings.
Investment properties remained the largest asset class, accounting for 44 percent of total assets, valued at US$1,16 billion.
Quoted equities followed at US$460 million (equal to 17,5 percent), while unquoted equities rose by 3 percent to US$108 million.
In contrast, prescribed assets’ share fell to 10,4 percent, representing roughly US$274 million of total holdings.
IPEC said this imbalance raises concerns about portfolio diversification and the broader developmental role of pension funds.
“The concentration of pension fund assets in a few classes exposes the sector to market volatility and reduces the multiplier effect of long-term savings on national growth,” the regulator said.
Financial markets analyst Mr Malcolm Mukaro said the imbalance between commercial and developmental investments reflects the cautious stance of fund managers.
“Pension funds are understandably risk-averse given the legacy of exchange rate losses and arrears by some project sponsors,” Mr Mukaro said.
“However, prescribed assets such as housing bills, agrobills and solar projects can be structured more attractively to restore confidence.”
There is need to create bankable, market-rate instruments, he added, that offer competitive returns to encourage compliance.
Another analyst, Mr Namatai Maeresera, said the low investment in prescribed assets was concerning but noted that “developmental projects can still be profitable if transparency and governance frameworks are strengthened”.
“Pension funds control long-term savings that could transform the country’s infrastructure base,” he said.
“With proper oversight, these funds can support housing, renewable energy and manufacturing while preserving value for pensioners.”
IPEC hinted at stronger enforcement measures if the sector fails to meet its obligations, warning that non-compliance with the prescribed asset ratio could attract regulatory action.
“Funds must demonstrate concrete plans to align with the 20 percent minimum. The commission continues to assess compliance and will not hesitate to invoke provisions of the Pensions and Provident Funds Act,” IPEC said.
The commission is also encouraging administrators to consider green investments and public-private partnerships (PPPs) that qualify for prescribed asset status.
Economist Mrs Gladys Shumbambiri-Mutsopotsi said the regulator’s approach was necessary to strike a balance between prudence and public interest.
“Pension savings are a vital source of domestic capital formation,” she said.
“Allocating a meaningful share to prescribed assets creates jobs, builds
infrastructure and supports financial stability.”
Experts also believe modernising asset reporting systems could help improve compliance and trust.
“Transparency remains a challenge,” said Mr Maeresera.
“Digital dashboards showing each fund’s prescribed asset exposure would create accountability and allow regulators to track compliance in real-time.”
In its report, IPEC said the sector’s asset growth was largely underpinned by the stability of the Zimbabwe Gold (ZiG) currency and steady macroeconomic conditions.
It urged pension funds to leverage this stability to rebalance their portfolios towards development-oriented investments.
