Chronicle EditorBusiness Reporter—
Self-administered pension funds contributions declined 23,6 percent to $364 million in the third quarter of 2016 from $477 million in the same period last year, the Insurance and Pension Commission said.In the third quarter report for Self Administered Funds, IPEC said 57 percent were in contribution arrears.
The commission said various legislative processes and other engagements with the sponsoring employers have taken place to make sure that they settle the arrears.
“To preserve member values and benefits and to promote administrative efficiency, IPEC has jealously monitored expense ratios. Resultantly, the expenditure rationalization caused cost cuts from the previous $32 million to the current $27 million,” said IPEC.
Expense ratios correspondingly declined to close the period at 17 percent. The total asset base for the funds grew from $1,916 billion recorded previously to $2,238 billion despite the prevailing unattractive investment returns.
Uptake of prescribed assets for the period under review increased markedly as a result of regulator-industry engagements to ensure at least 10 percent was invested to fund Government capital projects.
Total fund membership for standalone funds was composed of 184 000 active members and deferred pensioners stood at 108 000, which saw an increase of four percent from the same period last year.
Pensioners comprised seven percent of the total membership at 24 900 whereas in 2015 they were 24 500 while the balance were the beneficiaries. Employers contributed $39 million while members contributed $40 million of total contributions. IPEC said the challenge of spiralling contribution arrears continues to put pressure on the industry due to viability constraints as reflected by the balance of $133 million of total contributions, in arrears
For the period under review, standalone funds received contributions to the sum of $79 million compared to the $109 million of last year while administration expenses were $13 million.
Benefits for the period increased to $61million for the cumulative 9months ended 30 September 2016 from $54 million in 2015.
“Due to the knock-on effect of administrative expenses on member values and benefits, IPEC is closely monitoring expense ratios with a view to preserve same. This becomes a critical survival avenue not only because of huge arrear contributions but also unattractive investment returns in the economy,” said IPEC.
Total fund membership for insurer administered funds was 28 000 shared between 27 000 active members, 1 047 pensioners and the balance being beneficiaries and deferred members. Member contributions amounted to $12 million compared to $13 million last year while sponsoring employers paid $ 22 million.
“We continue to engage sponsoring employers to remit pension contributions timeously given the mandatory nature of contribution arrears,” said IPEC.
Insurers received $35 million in contributions from self-administered funds during the period, an eight percent decline from the same period last year.
Total income, however, increased six percent from $36,5 million in 2015 to $38,8 million for the current review period.
Following IPEC’s intervention in relation to prudent cost rationalization, the administration bill declined 39 percent from $10 million previously to $6 million.
Fund membership was composed of 75 297 members made up of 47 539 active members, 17 030 deferred pensioners, which was a huge increase from 6 568 in 2015.
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