NAPSA INVESTMENTS OPERATIONS - PRESENTATION

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1 NAPSA INVESTMENTS OPERATIONS - PRESENTATION RESIDENT DOCTORS ASSOCIATION 24 TH MARCH 2017 DOROTHY SOKO DIRECTOR INVESTMENTS

2 Contents Introduction/Background Management of Investment Assets Investment Guidelines Allowable investments Investment Portfolio 2

3 Introduction Background: February Inception of NAPSA NAPSA Act Establishes the Scheme and the Authority-to administer the operations of the scheme and that of ZNPF. ZNPF Assets and Liabilities To be managed on custodial basis. 3

4 Introduction Cont d 1. Establishment of the investments Department, prior to this, all investments undertaken by Finance Department 2. Deals with the construction and maintenance of a collection of investments 3. December 2007 Restructuring, some departments merged with others 4. Transformed and Included Investments in Real Estates, creation of Properties Section in the Directorate 4

5 VISION To be the model social security institution in Africa

6 MISSION STATEMENT To prudently administer and be custodian of a viable social security scheme that guarantees income security to its members

7 Management of Investment Funds Management of the Investment funds is guided by the following; NAPSA Act No 40 of 1996 The main law that governs the running of investments is the National Pension Scheme Act No. 40 of 1996, and is the legislation that gave birth to NAPSA. Investment Guidelines SI 19 of 2017 define the principles that guide NAPSA in the management of its Investment Portfolio.

8 Purpose of Investing Capital preservation and Risk reduction To accumulate a reserve fund for benefits payments in future Returns To matching assets with future liabilities. the value of assets at all times be adequate to cover value of scheme liabilities. 8

9 Investments guidelines NAPSA will act prudently and in the sole interest of its members and will maximize its investment returns within acceptable levels of risk diversify its portfolio and limit its risks of loss attributable to investment in any one company Ensure that there is sufficient liquidity Invest funds taking into account the term of its liabilities 9

10 NAPSA Investments Guidelines The Authority has undertaken a review of its current investment to align long-term investment strategies and investment portfolios to maximize the return on investment within the acceptable range of investment risks. 10

11 CURRENT & PROPOSED INVESTMENT GUIDELINES Asset Class Current IG Ceiling(%) Proposed (%) GRZ Bonds/TBs - 2.5% minimum Listed Equities Corporate Bonds Term Deposits 5 5 Real Estate Direct Indirect Socially Econ Inv. 5 5 Leases 5 State Owned Ent. 5 Start ups. Underwriting 5 5 Infrastructure N/A 15 Private Equity (non listed N/A 10 Collective Investment Schemes N/A 5 SPVS created by NAPSA N/A 100 Offshore 30 11

12 Investments- Treasury A properly constructed portfolio achieves a given level of expected return with the least possible risk Portfolio managers have a duty to create the best possible collection of investments for each customer s unique needs and circumstances NAPSA/ Pension Fund- Collects contributions and disburses various benefit payments to members - collection of contributions -Investments -Benefits 12

13 The NAPSA Investment Portfolio as at 31 st December 2016 Asset Class Net Investment (K ) % of Portfolio GRZ Bonds 5,110,817, Property 3,222,325, Term Deposit 3,772,627, Equities 1,386,146,349 8 T/Bills 3,664,186, Other Debt investments Corporate Bonds 115,367,138 1 Total 17,271,470,

14 Investments Portfolios in the Health Sector At a Glance Health is a priority sector for the Authority and the national because it is a basic human need. Health impacts the ability of people to study, work and care for their families access to quality health care promotes development and poverty reduction. Across emerging markets, the private sector plays a significant role in health services and life sciences, including for the poorest countries with scarce public resources. NAPSA is uniquely positioned to promote

15 Investments portfolio in the Health Sector by NAPSA Current- no investments in any specific health Sector Investment portfolio Predecessor ZNPF-GMMA PHACEUTICALS Future consideration- Introduction of Infrasture, private equity, Socially and economically targeted investments, collective investments schemes, subsidiaries- provides opportunities and wider scope for the Authority to ventures into Health portfolios Investments models such as PPPs, Co-Investments, Partnerships provides viable platforms for structuring successful deals and health care funding

17 Typical Portfolio Construction Typical Investment portfolio % Biotechnology 15 Health Distributors 2 Healthcare Equipment 10 Healthcare Facilities 5 Health Care Services 1 Health Care Supplies 1 Health Care Technology 3 Pharmaceuticals 50 Managed Healthcare 13 Total 100

18 Industry Returns 1. ROE 2. Net yield 3. Asset growth 4. External management fees 5. Total transaction costs 6. Operating expenses

19 Industry success factors o Return on assets o Return on equity Operating margin Cost to income ratio Staff cost to income Leverage o Process efficiency o Non-performing rental debtors o Operational efficiency

20 THANK YOU END

PRESENTATION TO RESIDENT DOCTORS WORKSHOP

Mason Mwiinga/Dorothy Soko DCB/DI PRESENTATION TO RESIDENT DOCTORS WORKSHOP 6 TH 24 March 2017 OVERVIEW OF THE PENSION POLICY IN ZAMBIA 2 The following social contingencies: are covered currently in Zambia: