IPEC revises pension funds investment limits

Martin Kadzere Senior Business Reporter
THE Insurance and Pensions Commissions (IPEC) has revised investments thresholds that pension funds and life companies can invest in public-listed companies and financial institutions.

According to the new guidelines, not more than 15 percent of fund’s assets should be invested in listed company, a downward revision from 50 percent. The investment limit of a fund in banks has been raised from 10 percent to 15 percent, IPEC said last week.

The original guidelines were put in place in 2013 while pension funds and life companies were expected to fully comply by April this year.

“Where there is need to deviate from the limits provided in 2013 . . . an application must be lodged with the commission,” said IPEC.

“Each pension fund that cannot meet the deadline to restructure the investment portfolios (in line with the new regulations) must submit a plan to align its portfolio.”

The limit that a fund can invest in other investment categories have remained unchanged. These include investment of up 40 percent of total fund’s assets in prescribed assets.

Prescribed assets are bonds or securities issued by the Government, local government, quasi government organisations or any other bond that may be accorded the prescribed asset status.

Pension funds can still invest up to 50 percent in properties, 10 percent in unquoted companies and 45 percent in money market. The cash in any bank should not exceed 5 percent of the total investment while not more than 10 percent of the fund should be lent to the employer.

As at June 30, 2015, standalone funds invested $601 million or 47 percent in properties (June 2014: $578 million or 48 percent), $150 million or 12 percent in capital market securities (June 2014: $171 million or 14 percent), $34 million or 3 percent in money market investments (June 2014: $54 million or 4 percent), $451 or 36 percent in other securities (June 2014: $386 million or 32 percent), said IPEC in its half year report for 2015. By the end of last year, the average prescribed level was 6 percent.

Pin It