Govt increases local pension funds investment
Government has taken a bold step to increase limit of pension funds investment locally from 30 percent to a minimum of 50 percent.
“This is in an effort to avail funds held by Pension Funds available for developmental purposes in Botswana, to contribute towards boosting the local economy and to create the much needed sustainable jobs,” said Finance Minister, Peggy Serame presenting the Retirement Funds Bill, 2022 to parliament.
According to Serame, the objective of the Bill is to repeal and re- enact, with amendments, the Retirement Funds Act.
Under the proposed legislation, there will be provision for improved encashment of residual funds in instances where a deferred member has defaulted on any loan other than mortgage owed, such that the amount which can be accessed to pay for the loans is increased from the current one third to
100percent of pension, provided that the pension can cover the whole amount of the loan, a deferred member has defaulted on Mortgage loans owed.
“This is a new provision which allows access to deferred pension to repay mortgage loans for principal homes; and a deferred member has become terminally ill and has to pay for medical expenses. This is also a new provision, which, will allow access of deferred pension to pay for medical bills in respect of terminal ailments,” said Serame.
She emphasized that enhanced proposed encashments in the bill are for deferred members only and as for other categories such as active members and pensioners.
“It is important to make changes from an informed position as management of pension funds is complex and requires actuarial valuations into a distant future, which is uncertain.”
Currently, NBFIRA and the Ministry of Finance are conducting a study to review the effect and impact of allowing encashment concessions for active members and pensioners on the pension system in Botswana.
“The results of the study are expected in November, 2022. The adopted changes from the study, will then be processed as subsequent amendments as soon as the study is completed,” said Serame.
Meanwhile, Botswana Public Officers Pensions Fund ( BPOPF)’ s current investment on the local market is above 33.5 percent, invested in both listed and unlisted companies.
The Chief Executive Officer of the Fund, Moemedi Malindah said BPOPF wants more on the local market.
“There is potential on the local market, as a Fund our target is to invest 40 percent locally, we have always been ahead, and going forward we would like to do more here than outside,” said Malindah highlighting that BPOPF’s appetite for local investment will push more companies to list.
The over P90 billion Pension Fund has been aggressively seeking significant opportunities on the market through its various investment vehicles.
On the other hand, Debswana Pension Fund which represents 12,466 members with assets under management of BWP 10 billion as at December 2021 is also actively looking for investments on the local market.