1 week Ago By ZimSitRep_M
Source: Pensions industry’s financial position strengthens in 2024 –Newsday ZimbabweTHE pensions industry’s total asset valuation rose by 13,3% to US$2,26 billion last year, driven by revaluation gains, new investments and fair value gains on investments, a new report has shown.The growth, from a 2023 comparative of US$2 billion, expands the industry’s investment capacity.In the Insurance and Pension Commission (Ipec) new report for the year ended December 31, 2024, the regulator noted that the industry’s assets were concentrated in investment properties and quoted equities.
This, Ipec said, made up 68% of the total asset portfolio.“The pensions industry was composed of 967 registered occupational pension funds as at 31 December 2024. Out of the 967 registered funds, 489 were active, making up 50,6% of the industry’s total funds.
The remaining 478 funds were inactive, with 372 (77,8%) earmarked for dissolution pending finalisation of the pre-2009 compensation,” Ipec said.The regulator revealed that the industry’s total membership, excluding beneficiaries, was 977 423 as of last year, an increase from 940 712 in 2023.“The 3,9% increase in membership was due to new entrants.
The total industry assets in the pensions sector amounted to ZiG58,3 billion, equivalent to US$2,26 billion by applying the official exchange rate,” Ipec said.“This represents a 13,3% increase from US$2 billion as at 31 December 2023. This growth was primarily driven by revaluation gains, new investments as well as fair value gains on investment properties and equity instruments.
”Ipec said contribution arrears were US$68 million (ZiG1,75 billion), constituting 3,01% of the industry’s assets.“This was an increase of 4,9% from US$64,81 million in the prior year, wherein contribution arrears constituted 3,25% of total industry assets,” the regulator said.“The increase, though affected by exchange rate distortions, is indicative of a growing challenge of non-remittance of contributions by fund sponsors as they fall due.
”NewsDay Business understands that the commission has since commenced processes to garnish the accounts of defaulting employers as required by the Act.As at December 31, 2024, investment properties were valued at US$1,06 billion (ZiG27,35 billion), representing 47% of total assets.“This was an increase from US$993 million, which accounted for 50% of total assets in the comparative period.
Quoted equities marginally declined by 0,51% in US$ terms, from US$466,06 million on 31 December 2023 to US$463,7 million (ZiG11,96 billion) on 31 December 2024,” Ipec said.“The share of quoted equities to total assets also suffered a decline with the proportion of total assets falling to 21% from 23% in the prior year. The decline was because of all share index slowing down towards the end of the year.
”Investments in unquoted equities increased by 19,63% to US$79,22 million (ZiG2,04 billion) from US$66,22 million during the same period last year, according to the regulator.“This resulted in an increase in the proportion of unquoted equities to total assets from 3,32% to 3,51%,” Ipec said.Prescribed assets increased by 47% to US$264,4 million last year from US$180,19 million in 2023, driven by revaluation gains and investments in the approved assets.
“Notwithstanding the surge, prescribed assets made up only 12% of the total industry assets at 31 December 2024, against a minimum prescribed asset ratio of 20%, up from 9% in the previous year,” Ipec said.Prescribed assets are specific investment instruments that pension funds, insurance companies and other institutional investors are legally required to hold as a percentage of their total portfolio.These funds are used for economic development, especially given Zimbabwe’s limited access to external credit.
“To achieve the required minimum threshold, the industry is encouraged to invest in various instruments that have been granted prescribed asset status,” Ipec said.The post Pensions industry’s financial position strengthens in 2024 appeared first on Zimbabwe Situation..
