THE Insurance and Pension Commission (Ipec) has threatened to take action on pension funds for their low uptake of prescribed assets, as the stock of government bonds stood at $220 million.
BY BERNARD MPOFU
This comes amid concerns that public sector borrowings would crowd out private sector financing.
According to the latest Ipec report, as at June 30 2016, the total asset base for standalone funds was $1,37 billion.
Property accounted for 45% or $623m (June 2015: 47% or $596m), capital market $130m or 10% (June 2015: $149m or 12%), money market accounted for $51m or 4% (June 2015: $34m or 3%) and prescribed assets were at $63m or 5% (June 2015: 3% or $33m ).
Other assets were $504m or 37% (June 2015:36% or $449m).
“Prescribed assets continued to be grossly undersubscribed, despite directives to the contrary. The commission will continue to penalise the industry in order to ensure compliance,” the insurance regulator said in the report. Among some of the bonds that were issued during the period under review are the Infrastructure Development Bank of Zimbabwe’s $50m bond to upgrade Kariba hydro power station; Agricultural Marketing Authority ($50m to finance the purchase of grain by the Grain Marketing Board); FBC and Agribank agro bills and the Zimbabwe Electricity Transmission and Distribution Company’s $15m bond for prepaid meters.
During the period under review, total contributions increased by 19% to $316m.
- Chamisa under fire over US$120K donation
- Mavhunga puts DeMbare into Chibuku quarterfinals
- Pension funds bet on Cabora Bassa oilfields
- Councils defy govt fire tender directive
Keep Reading
However, 84% or $263m were arrear contributions, implying that only 16% of contributions were collected. “This indicates the liquidity squeeze that sponsoring employers may be facing in meeting their statutory obligations.
Ipec said it will continue to monitor the situation and funds may approach the commission, who may deploy administrative measures in line with the Act and regulations.
However, the commission will not write off arrear contributions under any circumstances, the report read.
For the period ended June 30, 2016, total received contributions remained flat at $49m relative to prior year.
Total expenses for the period grew by 6% from $9,7m previously to the current $10m.
The average expense-to-contribution and expense-to-income ratios remained almost static as well.
Cost management is essential in an endeavour to preserve member benefits and values.
According to Statutory Instrument (SI) 24 of 2016, insurers were now required to have a prescribed asset ratio of 7,5% of the market value of total adjusted assets, including those in funeral assurance business.
The SI showed that all insurers were required to conduct self-assessment to prescribed ratios within 14 days after the end of every calendar month based on management accounts.
“An insurer, who fails to comply with the minimum prescribed assets ratios, shall, within 30 days from date it becomes aware or ought to be aware of the non-compliance, advise the commission, in writing, of the non-compliance and the plan to regularise the non-compliance within a period of not more than six months from the date of the submission of the plan.”
