The Pension Fund Administrators in Zimbabwe have shown a mixed performance for the first quarter of 2024, according to the latest Pensions Industry Report for the quarter ended 31 March 2024.
This report by the Insurance and Pensions Commission (IPEC) highlights key developments and supervisory activities consistent with IPEC’s statutory mandate to protect policyholders and pension scheme members in Zimbabwe.
The report highlights various aspects of the operations of the Pension Fund Administrators, including sources of income, major cost drivers, administration fees, forex business, and asset distribution among independent administrators.
The first quarter of 2024 was a period of significant financial activity for Zimbabwe’s Pension Fund Administrators because while they faced high costs, particularly in salaries and operating expenses, their income sources were robust, with substantial contributions from administration fees and forex income.
On the sources of income for administrators, for the period ending 31 March 2024, Pension Fund Administrators in Zimbabwe recorded a total income of ZW$70.7 billion.
The sources of income were diverse, with administration fees being the largest contributor at ZW$31.31 billion, making up 44.28 percent of the total income.
This was followed by fair value gains at ZW$14.67 billion (20.75 percent ) and investment income at ZW$11.94 billion (16.89 percent).
Other notable income sources included consultancy fees (4.85 percent ), cost of guarantees (9.30 percent) and commissions (3.62 percent ).
The total expenditure for Pension Fund Administrators during the same period was ZW$96.2 billion. The major cost drivers were salaries and wages, which accounted for a significant 59 percent of total expenses, amounting to ZW$50.51 billion.
Operating expenses followed at 22 percent (ZW$18.67 billion), with commissions and rentals each constituting six percent of the total expenses. Other costs included office expenses (four percent), insurance and licenses (three percent) and computer expenses (three percent).
Administration fees remained a crucial part of Pension Fund Administrators’ revenue, with 79 percent of these fees transacted in foreign currency.
This highlights the importance of forex in their operations.
Notably, some administrators like Econet had 100 percent of their administration fees in forex, while others like Fidelity had a minimal forex component at just eight percent.
The total administration fees across all administrators amounted to ZW$31.31 billion.
Forex income played a significant role in the financial health of Pension Fund Administrators. Total forex income for the quarter was US$49.52 million, a 161 percent increase from the previous year.
This included US$26 million in forex contributions and US$6.9 million in benefits expenditure. The reliance on forex was evident, with 10 out of the 13 administrators recording some form of USD business during this period.
The total assets for independent administrators, excluding life assurers, were valued at ZW$14.84 billion and US$25,436.
The asset distribution was heavily skewed towards property and equipment, which constituted 43% of the total assets.
Equities and trade receivables each made up 23 percent, while bank and cash balances were at four percent.
Money market investments also accounted for four percent, indicating a diverse investment portfolio among independent administrators.
The diverse asset distribution among independent administrators also reflects a strategic approach to investment, ensuring resilience and growth potential in the face of economic challenges.
