Surplus pension earnings recorded


PENSION industry earnings in the half year to June 30 2018 recorded a surplus of US$121 million buoyed by US$178 million contribution income and US$91,56 million investment income.

By Melody Chikono

The two income streams accounted for 97% of the US$278,66 million total income recorded for the industry during the period under review.

However, this is a 12,8% decline from US$320 million same period last year owing to lower investment income in the period under review.

According to the Insurance and Pension Commission (Ipec) report on the pension industry for H118 report, investment income declined by 48,3% to US$91,56 million in H1 US$135,19 million in H1 2017.

The relative decline in investment income was mainly as a result of lower fair value gains on equities in the half year compared to the same period in 2017.

The Zimbabwe Stock Exchange reported an unprecedented bull run last year that saw the market reaching an all-time high of US$16 billion.

The total expenditure for the industry amounted to US$158 million driven by pension benefits which totalled US$119 million, accounting for 76% of total expenditure.

“The industry also reported total administration expenses amounting to US$38,62 million for the period under review. The administration expenses translated to average expense ratios of 19,09% and 11,23% based on total contributions and total income respectively. The Commission is concerned about the unsustainable administrative expenses and encourages trustees to consider necessary cost containment measures,” said Ipec.

Total income of US$52 million and total expenditure amounting to US$36,4 million were recorded for the insured schemes, resulting in a US$15,84 million net surplus with contributions—which totalled US$46,82 million—accounting for 90% of the total income for the period.

The total income was 43,78% higher than the US$$36,18 million in the same period in 2017.

Self-administered funds made a total surplus of U$57,58 million for the period, buoyed by total income amounting to US$111,19 million for the 6 months ended 30 June 2018 as well as accrued contributions and profits from the disposal of investment assets.

The two income drivers accounted for a combined US$82 million, translating to 72% of total income for the period.