Revaluation gains anchor the pension industry asset base
REVALUATION gains on investment property continue to anchor the pensions industry asset base, which stood at $10,62 trillion as of September 30, 2023, compared to a value of $903,83 billion for the same period in 2022.
The Insurance and Pensions Commission (Ipec), in its quarterly report, said investment properties amounted to $5,85 trillion during the period under review, compared to $427,07 billion during the comparative period last year.
Quoted equities increased 782 percent to $2,22 trillion, compared to $251,59 billion as of September 30, 2022.
“Unquoted equities nominally increased by 1 097 percent and had a 36 percent real increase from $39,46 billion as of September 30, 2022 to $472,39 billion as of September 30, 2023.
“This was mainly attributable to the increase in appetite for private equity,”reads the report.
During the period under review, prescribed assets nominally increased by 1 268 percent, from $59,73 billion in 2022 to $816,87 billion.
“In real terms prescribed assets increased by 56 percent, and the Commission continues to enforce industry compliance with the approved value-preserving instruments to ensure full compliance with the 20 percent regulatory threshold by January 2024,”Ipec said.
The report highlighted that total income for the period under review was $8,59 trillion as compared to $504,80 billion as of September 30, 2022.
According to Ipec, this translated to a nominal increase of 1 601 percent and a real increase of 94 percent.
“Total income was mainly driven by fair value gains on investments, which constituted 82 percent of total income, while the remaining 11 percent comprises contributions, interest from investments, and other income.”
The industry’s total expenditure for the quarter was $331,86 billion, with 51 percent of the total amount going towards administrative expenditure and 49 percent towards benefit payments.
The report noted that total expenditure growth reflected a nominal increase of 732 percent from $39,77 billion for the same period during the prior year.
“However, in real terms, total expenditure decreased by 5 percent, mainly due to the industry’s efforts to comply with the expense framework,” reads the report.
According to Ipec, during the period under review, the economy continued to recover from various macro-economic challenges, resulting in improved performance during the third quarter of 2023.
It said the Government implemented bold policy interventions to address transitory price and exchange rate volatility, and as a result, the financial sector has begun to experience stability.
The report shows that there were 969 registered occupational pension funds as of September 30, 2023, compared to 988 funds as of September 30, 2022, and the decline was mainly attributed to 20 finalised fund dissolutions and 7 transfers to umbrella funds.
On the other hand, 7 new funds were registered during the period under review. Of the 969 funds, 496 were active, accounting for 51 percent of the industry’s funds.
Ipec said the remaining 473 funds were inactive as they were either paid up or undergoing dissolution, and of the total funds, 35 pension funds were defined as benefit schemes, while the remainder were defined as contribution schemes.