Zimbabwe: Pensions Industry Buoyant After Strong Fourth Quarter Performance

14 January 2021

Mutare — The Insurance and Pensions Commission (IPEC) has reported a surge in membership for its various insurances schemes in the last quarter of 2020, opening the year on a high.

In its fourth quarter report, IPEC said it recorded an astronomical surge in its assets base which increased by '1043.39% from $9.45 billion as at 30 September 2019 to $108.05 billion'.

This positive performance of both contribution schemes and defined benefit schemes was attributed mainly to revaluation of investment property and quoted equities, of the 961registered funds, 914 were defined contribution schemes whilst 47 were defined benefit schemes.

IPEC said its total membership, 'excluding beneficiaries stood at 888 690, as at 30 September 2020, having risen from 798 828 as at 30 September 2019', as it recorded an upsurge of prescribed asset values.

"The number of registered funds in the pensions industry stood at 961 as at 30 September 2020 compared to 1 094 funds reported as at 30 September 2019. Of the 961 registered funds, 914 were defined contribution schemes whilst 47 were defined benefit schemes.

"The total asset base of the industry increased by 1043.39% from $9.45 billion as at 30 September 2019 to $108.05 billion as at 30 September 2020 whilst annual inflation was at 654.9%.

"The increase in the asset base was mainly due to revaluation of investment property and quoted equities, which increased by 1489.18% and 706.47% respectively. The two asset classes, investment property and quoted equities had a combined value of $84.27 billion, accounting for 77.99% of total industry assets," read part of IPEC statement.

IPEC said the insurance and pensions industry total industry expenditures for the 2020 fourth quarter stood at $2.18 billion, of which $1.30 billion was for pension benefit payments.

Cumulatively the industry spent a total of $885.12 million on administrative expenditures for the period January to September 2020 amounted to compared to $341.84 million for the same period in 2019

On average the expenses ratio to total income ratio for the period under review was a low 1.21% compared to 3.68% in the prior year, but administration expenses to income ratio as at September 2020 was still high at 2.67%.

IPEC said 'major cost drivers of administrative expenditure were staff costs and administrator expenses which constituted 22.05% and 19.84% of administrative expenditure respectively.'

"Total income for the industry during the 9 months to September 2020 was $58.97 billion compared to $2.69 billion for the same period in 2019. The income was driven by fair value gains and interest on investments which constituted 54.76% and 31.59% of total income respectively.

"The value of prescribed assets increased by 1144.44% to $8.96 billion as at 30 September 2020 from $0.72 billion reported as at 30 September 2019. Whilst there was an increase in the nominal value of prescribed assets investments, compliance was still low at 8.29% against the regulatory minimum of 20%," said IPEC.

IPEC is a statutory body mandated to regulate, supervise and develop the insurance and pensions industry for the protection of policyholders and pension outlines industry developments and activities in the pensions industry consistent with its statutory mandate.

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