Pension funds arrears continue to rise

ARREARS to pension funds have continued to rise in the first quarter ending March 31, 2017 from $351 million to $512 million compared to the same period last year.

Despite the arrears, the sector managed to register a surplus of $30,96 million after collecting $105,65 million against an expenditure of $89,13 million.

IPEC’s first quarter report notes that the larger chunk of the revenue is attributable to members’ contributions, rental income and investments income that contributed 94,22 percent of the total income.

The report, however, does not include the public-sector pension scheme, National Social Security Authority (NSSA).

Despite the $30 million profit, IPEC notes that the industry - whose worthy now stands at$3,35 billion - is being pegged back by the continued rise in the arrears book.

“Total assets for the pensions industry amounted to $3,5 billion at March 31, 2017,” reads the report.

“However, the Commission noted - with concern - a significant proportion of total assets totalling 15, 27 percent of the asset base that was tied up in contribution and rental arrears. These two asset classes amounted to $462,99 million and $49,41 million respectively as at March 31, 2017.

“The high level of contribution and rental arrears compromises the asset quality, especially when recoverability of the same is doubtful under the existing operating environment. The challenge in respect of contribution arrears was mainly prevalent in standalone self-administered funds with a total of $407,96 million arrears,” reads the report.

The pensions industry as at 31 March 2017, according to the latest report, had 1 297 registered private occupational pension funds with total membership of 560 528.

Life assurance giant, Old Mutual continues to dominate the industry with 528 schemes, while the other four assurers Fidelity Life, First Mutual Life, ZB Life and Zimnat Life sharing the remaining 578 schemes to take the consolidated total to 1 106.

Despite strong showing from contributions in insured schemes, which totalled $19, 89 million or 96,87 percent of total earning, the insured schemes registered a negative retain of $0,62 million after amassing $20,53 million in the period under review against $21, 16 million chewed by expenditure.

The schemes’ asset base stood at $837,99 million but there is an obvious bias towards money market investment and prescribed assets which claimed 71,79 percent with a value of $326,31 million and $275,25 million respectively.