THE Insurance and Pensions Commission has proposed upper limit investments for life companies and pension funds as it seeks to enhance their viability. IPEC has proposed a 70 percent investment limit of the members' funds in prescribed assets, 40 percent in properties, 40 percent in listed companies, 5 percent in private equity, 70 percent in money market and 10 percent in cash.
"The Insurance and Pensions Commission has seen it fit to introduce the above guidelines so as to buttress . . . maintenance of confidence in life companies and pension funds by exercising fairness in the payment of benefits as well as ensuring that pension payouts are effected timeously and in line with fund members' reasonable expectations,"
IPEC Commissioner of Insurance, Pension and Provident Fund Mrs Marnet Mpofu in a letter to fund administrators. She said an insurer cannot put more than 10 percent of its investments in an associate company and a pension fund cannot invest or lend more than 10 percent to an employer.
Loans to staff and management are also considered as investments.
"Life companies have a duty to invest in assets which will enhance their ability to settle in time, maturing policies as well as pay fair and reasonable pensions. Moreover, the rights and interests of beneficiaries must be protected at all times," she said.
Mrs Mpofu noted that solvency was critical in ensuring the viability of life companies and pension funds. This enhances their ability to meet obligations on time, she said.