Online Reporter
Nelson Gahadza, Zimpapers Business Hub
Zimbabwe’s pension industry recorded moderate asset growth in the third quarter of this year, with total assets growing by five percent to US$2,77 billion, but the sector continues to lag behind regulatory requirements on prescribed asset compliance.
According to the latest Insurance and Pensions Commission (Ipec) pensions report for the third quarter and the nine months to September 30, 2025, pension fund assets grew by 5 percent from US$2,63 billion recorded at the end of June, driven largely by new acquisitions and fair value adjustments on property investments and equities.
In local currency terms, total assets stood at ZiG73,84 billion.
Despite the overall growth, Ipec noted that compliance with prescribed asset requirements remains significantly below the statutory minimum.
During the period under review, pension funds’ prescribed asset holdings amounted to just 10,64 percent of total assets, well short of the required 20 percent.
“Projects granted prescribed asset status provide opportunities for portfolio diversification while promoting investments that support national development and align with the objectives of the National Development Strategy 1.
“Therefore, the commission encourages pension funds to meet the regulatory minimum threshold of 20 percent of total assets through investing in a wide array of assets conferred with prescribed asset status,” reads part of the report.
During the quarter, prescribed assets, which include instruments such as infrastructure-related investments and gold-backed products, increased by 7,53 percent, rising from US$274 million as at June 30 to US$294,63 million.
“While the increase reflects growing participation in these instruments, the pace remains insufficient to close the compliance gap,” Ipec noted.
The report shows that gold-backed investments continued to play a stabilising role within prescribed assets; hence, the number of gold coins held by pension funds remained unchanged from the previous quarter, but their value rose by 16 percent to ZiG204,08 million from ZiG176,46 million.
Ipec attributed the increase to gains in international gold prices rather than new acquisitions, underscoring the importance of commodity-linked instruments in preserving value during periods of exchange rate stability.
According to the pensions report, the asset allocation profile of the pension sector remained heavily skewed towards property and equities. Investment properties were the single largest asset class, valued at US$1,3 billion (ZiG34,65 billion) as of September 30, accounting for 46,93 percent of total assets, reflecting both acquisitions and revaluations.
Quoted equities also posted strong gains, rising by 15 percent to US$528,85 million, or ZiG14,09 billion, from US$460,37 million at the end of June, and their share of total assets increased to 19,08 percent from 17,50 percent in the previous quarter, benefitting from improved market performance and portfolio rebalancing.
Unquoted equities recorded the most pronounced growth during the quarter, surging by 149 percent to US$269,17 million from US$108,17 million previously.
Ipec said the sharp shift partly reflected the reclassification of previously aggregated pooled and prescribed asset investments, which were broken down into their underlying components.
Overall, investment properties, equities (both quoted and unquoted) and money market investments accounted for 80,04 percent of total pension sector assets, pointing to a high degree of concentration.
“While such assets have historically offered inflation hedging and capital preservation benefits, the commission has consistently encouraged greater diversification to enhance resilience and improve long-term returns,” reads part of the report. The sector’s foreign currency-denominated assets increased significantly during the quarter, rising by 43,3 percent from US$687,51 million to US$984,89 million, and these assets now represent 34,7 percent of total pension sector assets.
Ipec said the increase was driven by new acquisitions as well as the reclassification of some ZiG-denominated assets into US dollars.
“The growing share of foreign currency assets reflects pension funds’ efforts to hedge against currency risk and preserve value, particularly in an environment where long-term liabilities are increasingly linked to hard currency benchmarks.”
During the quarter under review, contribution arrears declined by nine percent to US$100,18 million, down from US$110,43 million previously. However, arrears still accounted for 3,61 percent of total sector assets, broadly in line with prior quarters.
Ipec urged sponsoring employers to prioritise the remittance of pension contributions, warning that enforcement action would be taken against defaulters.
“The fund’s sponsoring employers are encouraged to remit pension contributions to their respective pension funds,” the Commission said, adding that it would be engaging defaulting employers in line with Section 16 of the Pensions and Provident Funds Act.
During the period under review, the number of registered occupational pension funds remained unchanged at 968. Of these, 479 were active, representing 49,5 percent of the sector, while 489 were inactive, having been paid up or earmarked for dissolution.
Defined contribution schemes continued to dominate, accounting for 931 funds, compared to 34 defined benefit schemes and three hybrid arrangements.
Ipec said most funds relied on outsourced administration services, and as of September 30, a total of 953 funds had outsourced administration, with 797 classified as insured funds and 156 as self-administered.
In terms of financial performance, over the nine months to September 30, 2025, the sector recorded a sharp decline in total income, which fell to US$557,26 million, a 78,7 percent decrease from the US$2,61 billion recorded in the same period last year.
The commission attributed the drop mainly to reduced fair value gains and other income categories following exchange rate stability.
Of the total income, US$339,92 million, or 61 percent, was earned in foreign currency.
According to the report, contributions and investment income accounted for 93 percent of total revenue, underscoring their central role in sustaining the sector.
