Pensions industry total income spiral to ZW$54.59 billion in HY 2021

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  • Total income surged by 85%
  • Industry asset base up 198.72%
  • Investment property grew to ZW$74.02 billion

The pension industry recorded an 85% increase in total income to ZW$54.59 billion in the half year ended 30 June 2021 from ZW$29.55 billion achieved in the same period last year mainly driven by fair value gains, interest from investments, and contributions amounting to ZW$48.94 billion.

The Insurance and Pensions Commissions (IPEC) in its pensions report highlighted that the aforementioned drivers of the industry’s total income for the period constituted a combined 89.64%.

Investment property for the period under review grew by 164.83% to ZW$74.02 billion from 2020 comparative of ZW$27.95 billion.

“However, its contribution to the industry’s total assets declined from 42.09% to 37.31% as the industry invested in other financial instruments, which include quoted and unquoted entities, to diversify their portfolios,” read the report.

Contribution arrears increased by 242.70% to ZW$3.05 billion from a comparative last year of ZW$0.89 billion owing to continued non-remittances of contributions by some sponsoring employers as well as penalties on contribution arrears as required by the Guidance Paper.

During the six months, the industry asset base in nominal terms improved by 198.72% to ZW$198.38 billion from ZW$66.41 billion recorded in June 2020 while in US$ terms it increased by 100% to US$2.32 billion from a comparative of US$1.16 billion.

“The increase in the asset base was mainly due to the revaluation of investment property and quoted equities, which constituted 78.9% of total industry assets,” read part of the report.

“This points to price discovery on real assets following the 2019 currency reforms. The industry’s asset base of ZW$198.38 billion translates to a pension penetration rate of 18.53%, expressed as a percentage of the GDP, indicating the size of the industry relative to the national output.”

The number of registered funds during the period slightly increased to 976 funds from 960 in 2020 due to new funds registered during the six months.

“The Commission is still concerned about the high number of inactive funds which constitute 37% of the total funds. As such, work is underway to resolve them in line with the Framework for Resolution of Troubled Entities,” IPEC highlighted in the report.

Total expenditure for the half year was up 471.74% to ZW$5.26 billion from ZW$0.92 billion recorded on 31 March 2020 driven by total benefits paid, investment management expenses, and administration expenses which accounted for 64.12%, 8.37%, and 7.67% respectively.

Expenses to contribution ratio were 27.5%, whilst the expenses to total income ratio were 2.81% compared to 27.98% and 1.13% in 2020 respectively.

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