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Unpaid contributions affect pension funds

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The quality of assets for stand-alone pension funds was greatly compromised as of March 31, 2017 owing to a significant proportion of unpaid contributions amounting to $407,958 million, the Insurance and Pensions Commission (Ipec) has said.

BY FIDELITY MHLANGA

This constituted 27,28% of the total assets, the regulator said in a pensions report for the quarter ended March 31 2017.

According to Ipec, stand-alone pension funds total asset amounted to $1,496 billion at the end quarter indicating an improvement of $0, 22 billion from the $1 275 billion reported as at December 31, 2016.

The commission noted with concern that $361 million of the outstanding contributions and rentals arrears for stand-alone pension funds totalling $46,95 million was aged more than 180 days.

“Funds are urged to explore alternative ways of recovering unpaid pension contributions as well as rental payments in order to bring down the total. As at 31 March 2017, stand-alone funds had $61,79 million invested in prescribed assets, translating to 4,13% of the total assets. This is below the regulatory requirement of 10%,” the report noted.

According to Ipec, total assets for the pensions industry amounted to $3,35 billion at the end of the first quarter of 2017, with 73,99% of the assets base made up of assets suitable to match pension funds liabilities investment properties, cash and money market investments, equities, and prescribed assets.

The total assets for self-administered pension funds amounted to $1,02 billion during the period with the asset base skewed towards equities and investment properties which totalled $560,41 million and accounted for 55,03% of the total.

A breakdown of the total assets for stand-alone pensions fund based on investment horizon indicated that about 63% of the total assets were invested in long term investments and about 5% of the assets were in short term investments maturing within twelve months from the reporting date.

National Railways of Zimbabwe Pension Fund, Mining Industry Pension Fund and Local Authorities Pension Fund were the largest funds in terms of total assets as at March 31 2017.

Total income for pensions industry amounted to $112,53 million for the quarter. The income for the pensions industry was mainly attributable to contributions, rental income and investments income which totalled $105, 65 million and accounted for 94,22% of the total income.

The pension’s total expenditure amounted to $89,13 million resulting in a net surplus of $30,96 million for the quarter under review.

The pensions industry had 1 297 registered private occupational pension funds with total membership of 560 528 as at March 31 2017.

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