PENSIONS INDUSTRY 1 st QUARTER REPORT

Transcription

1 PENSIONS AND INSURANCE AUTHORITY PENSIONS INDUSTRY 1 st QUARTER REPORT For The Quarter Ended 31 March 2013 PREPARED BY PENSIONS DEPARTMENT 1

2 Contents 1.0 INTRODUCTION EXECUTIVE SUMMARY... Error! Bookmark not defined SUMMARY OF KEY INDUSTRY RESULTS FOR THE QUARTER 4.0 NET ASSETS RETURN ON NETS ASSETS FIXED INTEREST SECURITES EQUITY INVESTMENTS INVESTMENT PROPERTY REGISTERED PENSION SCHEMES MEMBERSHIP STATISTICS TOTAL CONTRIBUTIONS BENEFITS PAID EXPENSES MARKET SHARE OF SCHEMES (BY ADMINISTRATORS) FUND MANAGERS/SELF MANAGED MARKET SHARE IN TERMS OF NET ASSETS REGISTERED PENSION FND MANAGERS AND ADMINISTRATORS Fund Managers Fund Administrators

3 1.0 INTRODUCTION About Pensions and Insurance Authority The Pensions and Insurance Authority (PIA) is the regulatory and supervisory body for the pensions and insurance industry in Zambia. The key players regulated by PIA under the Pensions Department are pension schemes, fund managers and fund administrators. The Authority also helps to build the capacities of trustees. The Authority continues to work with various stakeholders locally and internationally to put in places policies that enhance the regulatory and supervisory environment for the pensions industry. About this report The Authority is pleased to release the 2013 first quarter industry report that covers the key industry results and financial statistics on the performance of pension industry funds. Disclaimer The information contained in this report has been extracted from the quarterly unaudited returns submitted to the Authority in line with the Pensions and Scheme Regulation Act No 28. No adjustments have been made except where necessary in consultation with stakeholders. 3

4 2.0 Key Developments in the Industry During the period under review, the pension net assets grew to ZMW3, 592 million from ZMW3, 383 million, representing a 6% increase. Inflation closed at 6.6% at the end of March 2013 (according to the Central Statistics Report). Total membership reduced to 99,681 from100, 672 during the quarter under review representing a 2% reduction as compared to 3% increase in the previous quarter. The total contributions also reduced to ZMW167 million from ZMW280 billion representing a 40% reduction. On the other hand, total benefits paid increased from ZMW107.9million (31 st December ) to ZMW116 million representing an increase of 8%. Outstanding benefits reduced to ZMW123 million from ZMW133 million. 4

5 3.0 SUMMARY OF KEY INDUSTRY RESULTS FOR THE QUARTER STATEMENT OF CHANGES IN NET ASSETS ZMW Contributions received Investment income Total Inflows 2013 Fits Qtr 2013 Fourth Quarter Third Quarter Second Quarter 167,484, ,620, ,796, ,300, ,545, ,331,606 43,298,008 75,683, ,030, ,951, ,094, ,984,435 Expenditure Benefits paid Administrative expenses Administration fees Management fees Other expenses Total Expenditure EXCESS/(DEFICIT) INCOME OVER EXPENDITURE 116,060, ,966, ,759,946 92,347,536 17,991,269 21,898,546 14,120,206 14,233,014 4,038,266 3,746,292 3,948,097 3,591,842 4,540,696 9,339,852 7,979,615 7,473,495 11,396,924 6,916,137 5,150,369 4,479, ,027, ,867, ,958, ,125, ,002, ,084,820 50,135,837 98,858,992 STATEMENT OF NET ASSETS Fits Qtr 2013 Fourth Quarter Third Quarter Second Quarter ASSETS (a) Fixed Assets 13,603,073 13,673,310 13,663,839 13,744,052 (b) Investments (i) Fixed Interest Securities 1,158,573,781 1,042,078, ,085, ,069,294 Collective Investment schemes 134,382, ,094,355 83,575,035 77,077,422 (ii) Equities 938,088, ,720, ,021, ,177,041 (iii) Property 891,784, ,603, ,410, ,196,479 (iv) Cash Deposits 363,781, ,168, ,175, ,841,169 (v) Insurance policies 5,301,486 1,721,661 3,663,378 5,855,215 (vi) Commercial Papers 99,418, ,925,947 98,322,195 99,500,534 Loans to Employees 6,682,063 6,676,477 7,432,732 7,881,162 (vii) Others - Specify 6,044,049 7,197,804 9,793,464 8,094,557 Subtotal 3,604,056,126 3,305,186,786 3,157,479,136 3,087,692,873 (c ) Current Assets (i) Debtors 27,364,934 23,798,004 36,642,663 37,409,413 (ii) Accrued Income 28,953,022 21,477,971 22,518,769 20,648,829 (iii) Arrear Contributions 123,649, ,095,079 99,051,266 82,308,089 (iv) Cash at Bank 65,762, ,422,468 39,901,121 42,512,096 (v) Others - Specify 23,517,254 23,715,715 20,837,991 17,450,081 Subtotal 269,247, ,509, ,951, ,328,508 TOTAL ASSETS 3,886,906,711 3,668,369,333 3,390,094,785 3,301,765, LIABILITIES (a) Long term liabilities (Deferred liability on pension 3,730,825 3,688,000 6,917,000 5,036,000 (b) Current Liabilities (i) Creditors 101,841, ,649,407 96,032,529 78,296,961 (ii) Contributions received in advance 566, , ,861 1,168,734 (iii) Benefits Due 156,998, ,362, ,374, ,071,060 (iv) Bank Overdraft (206,000) 72,516 (v) Others - Specify 31,628,217 36,281,858 32,649,855 42,653,350 Subtotal 290,828, ,047, ,933, ,190,105 Total Liabilities 294,559, ,735, ,850, ,226,105 NET ASSETS AT THE END OF THE QUARTER 3,592,346,947 3,383,634,162 3,126,244,144 3,051,539,328 Membership Registered schemes Return on average net assets 99, ,672 98,419 95, % 16% 6% 10% 5

6 4.0 NET ASSETS The net assets for the pensions industry continued to increase as compared to the previous quarter. The consolidated pension statistics shows that the net asset value stood at ZMW3, 592 million in the first quarter from ZMW3,383 million in the fourth quarter of representing 6% increase. 5.0 RETURN ON NETS ASSETS 1 The return on average net assets during the period under review increased to 20% from 16% in the previous quarter. The industry achieved 13.4% above the inflation rate of 6.6% 2 during the quarter under review. Investment income during the quarter under review increased to ZMW174 million from ZMW126 million representing a 38% increase. 6.0 FIXED INTEREST SECURITES Investments in fixed interest securities rose to ZMW1, 158 million from ZMW1, 042 million representing 11% increase. These fixed interest securities accounted for 32% of the total net assets during the quarter under review. 7.0 EQUITY INVESTMENTS Investment in equity during the quarter under review increased to ZMW938 million from ZMW856 million in the previous quarter representing an increase of 10%. Dividends received reduced to ZMW1.9 million from ZMW9 million representing 80% reduction as opposed to the 233% increase in the previous quarter. The reduction can mainly be attributed to Saturnia Regna Pension Trust Fund whose dividend reduced from ZMW4 million to ZMW1 million in the first quarter of Equity investments accounted for 26.1% as compared to 25% of total net assets in the previous quarter. 8.0 INVESTMENT PROPERTY Property investments increased to ZMW891 million from ZMW864 million representing a 3% increase as opposed to 4% increase recorded in the fourth quarter of. Net rental income increased to ZMW13 million from ZMW11.8 million during the quarter under review. Revaluation gains reduced to ZMW4.8 million from ZMW14.2 billion in the previous quarter. The return on investment property during the quarter was 8% 3 1 This is an annualized figure 2 Inflation rates are as per Central Statistics Office Report released every month 6

7 as compared to 12% in the previous quarter. Property investments accounted for 25% of the total fund value. 9.0 REGISTERED PENSION SCHEMES The total number of registered pension schemes stood at 234 during the quarter under review. The progression of numbers of schemes is shown below: 1st Qtr th Qtr 3 rd Qtr 2 nd Qtr 1 st Qtr Defined Benefit schemes Defined Contribution schemes Hybrid Schemes (DB/DC) Total MEMBERSHIP STATISTICS Total membership reduced to 99,681 from 100,671 members representing 2% reduction as compared to a 2% increase in the previous quarter. The main reason for the reduction in membership was due to Saturnia Regna which contributed 75% to the reduction. The table below shows membership data. A detailed membership movement by each reporting scheme is shown in Appendix 1. Membership Data Description 1st Qtr th Qtr 3rd Qtr 1st Qtr % Change Active 66,237 67,318 65,109 63,145-2% Pensiones 17,731 16,621 14,043 15,854 7% Deferred 15,713 16,733 19,267 16,736-6% Total 99, ,672 98,419 95,735-1% 3 The return on property investments was computed as an annualized figure of total revaluation plus net rental income to average investments in property of the opening and closing balances during the quarter under review 7

8 11.0 TOTAL CONTRIBUTIONS Total contributions during the quarter reduced to ZMW167 million from ZMW280 million representing a 40% reduction. The reduction was mainly as a result of reduced special deficit funding which only accounted for 1% of total contribution during the quarter as compared to 44% in the previous quarter. Arrear contributions increased to ZMW123 million from ZMW105 million representing 17% increase during the quarter under review. When compared to the industry total contributions of ZMW123 billion during the quarter under review, it shows that the industry has 73% of its arrear contributions to total contributions. The industry is therefore compliant to the Pension Scheme Regulation Act considering that this is less than a 100% of total contributions BENEFITS PAID Total benefits paid during the quarter under review increased to ZMW116 million from ZMW107.9 million representing 8% increase. The makeup of these total benefits is discussed below: Pension payments reduced to ZMW12.9 million from ZMW13.8 million during the quarter under review. This represents 7% reduction. Lumpsum benefits increased by 21% to ZMW66 million from ZMW54.7 million during the quarter under review. Death benefits increased to ZMW3.8 million from ZMW2.7 million representing a 41% increase during the period under review. Table on Benefit Paid Benefit Type Quarter Quarter 4, Change Pension 12,958,138 13,784,131-6% Lumpsum 66,059,878 54,720,448 21% Death 3,839,280 2,732,021 41% Refunds 33,203,246 36,680,863-9% Transfer to other funds - 48, % Total 116,060, ,966,348 7% 8

9 13.0 EXPENSES Total expenses 4 reduced to ZMW25.6 million from ZMW52.2 billion representing 51% reduction during the quarter under review. A detailed make up of these expenses is discussed below. Operational expenses 5 reduced to ZMW17.1 million from ZMW39 million during the quartet under review. Investment management fees reduced to ZMW4.5 million from ZMW9.3 million during the quarter under review. These fees were 0.1% of the net assets as at the end of the first quarter Administrative fees increased to ZMW4 million from ZMW3.8 million during the quarter under review representing a 5% increase. The administration fees to total contributions were 2.4% in the first quarter of MARKET SHARE OF SCHEMES (BY ADMINISTRATORS) 4 Total expenses do not include payments made to the members, such as benefits paid or refunds 5 Operational costs excludes investment and administrative fees 9

10 15.0 FUND MANAGERS/SELF MANAGED MARKET SHARE IN TERMS OF NET ASSETS 16.0 REGISTERED PENSION FND MANAGERS AND ADMINISTRATORS There are now six Fund managers and six Fund Administrators. The following are the current authorized service providers for the pension industry in Zambia as at December 31, Fund Managers Number Name of Fund Manager 1 African Life Financial Services (Z) Ltd 2 Professional Life Assurance (Z) 3 Zambia State Insurance Corporation Life Ltd 4 Equity Capital Resources Limited 5 Madison Asset Management Company 17.2 Fund Administrators Number Name of Fund Administrator 1 Alexander Forbes Financial Services (Z) Ltd 2 AON Zambia Pension Fund Administrators 3 Benefit Consulting Services Limited 4 Madison Life Insurance Ltd 5 Professional Life Assurance 10

11 6 Zambia State Insurance Corporation Life Ltd 11