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Business Reporter
THE market value of the funded public service pension fund, which was established in 2018, has reached $1,4 billion after starting with only $70 million seed money the fund got from the Treasury.

Finance and Economic Development Minister Mthuli Ncube revealed this while giving an update of progress the New Dispensation has recorded as part of wide ranging reforms under the Transitional Stabilisation Programme (TSP).

The Treasury chief gave an extensive account of the many milestones, cutting across a range of disciplines, which the new administration has achieved since introducing the TSP in 2018, Government’s short-term recovery plan.

In 2018, the New Dispensation began the process of migrating from an unfunded pay as you go pension arrangement to a funded defined benefit pension scheme in line with regional and international best practices. An unfunded pension scheme is an employer-managed retirement plan that uses the employer’s current income to fund future pension payments as they become necessary.

This is in contrast to an advance funded pension scheme where an employer sets aside funds systematically and in advance to cover any pension plan expenses such as payments to retirees and their beneficiaries.

As such, the new public service pension fund was established in January 2019, as an interim measure.  And so, the Government in 2019 allocated $70,4 million as seed money.

The cumulative pension contributions during the period January 2019 to June 2020 amounted to  $759,5 million.

“As at 30 June 2020, the fund’s assets which are under asset managers and money market investment stood at $768,3 million at cost with a market value of over $1.4 billion,” Professor Ncube said.

As at 30 June 2030, 60 percent of the pension fund was held by asset managers, 28,7 percent were bank balances, 10 percent were money market investments while 1,15 percent was interest from the money market.

Minister Ncube said the pension fund was mooted as part of efforts by the Government to promote savings mobilisation, a critical element for driving domestic investment.

And to promote a saving and wealth creation culture among civil servants, the Government also initiated the creation of a voluntary savings scheme- Government Employee Mutual Saving Fund (GEMS) to support the borrowing needs of public service workers.

“Already, the steering committee is now in place to operationalise the fund. The fund is in line with the Vision 2030 that seeks to position Zimbabwe as a middle income economy by the year 2030,” Minister Ncube said.

Once the GEMS Fund is established, it is going to have positive effects including creation of employment and stimulation of return to proper commercial banking.

The GEMS Fund also comes as a non-monetary benefit to Civil Servants that seeks to address challenges faced by many of the Government employees.