Download → Pensions Industry Report - Fourth Quarter 2022.pdf

EXECUTIVE SUMMARY 

The pensions industry registered an increase in the net asset value from K12.40 billion as at 30th September 2022 to K12.82 billion as at 31st December, 2022. This represented an increase of K0.42 billion or 3.37 percent (Q3-2022: 1.2 percent reduction) in net assets. The increment was mainly attributed to increased investments in Government bonds by K289 million from K3.92 billion as at 30th September 2022 to 

K4.2 billion as at 31st December 2022, followed by listed equities which increased by K108 million from K2.3 billion as at 30th September 2022 to K2.41 billion as at 31st December 2022 and offshore investments increasing by K118 million from K680 million as at 30th September 2022 to K798 million as at 31st December 2022. On a year-to-year basis, net assets grew by K1.98 billion from K10.84 billion as at December 2021, representing an increase of 18.27 percent.

Total investment income1 increased from K315.51 million to K757.49 million during the fourth quarter of 2022. This represented an increase of K441.28 million or 140 percent during the quarter under review. The main factors leading to the increase were income arising from foreign exchange gains (K317.78 million), income from offshore investments (K136.56 million), dividends from equity (K90.29 million) and interest from Government bonds (K59.49 million). Despite all investments recording positive income, there were a few investments which recorded reduced income during the quarter under review. The asset classes that recorded reduced investment income during the period under review were fair value changes in equity (K183.78 million), profit or loss on sale of investments (K14.80 million), interest from cash deposits (K9.90 million) and rent from properties (K6.16 million). Furthermore, the annualized return on average net assets 

increased to 24.03 per cent (Q3, 2022: 10.12 percent). Year-on-year inflation as at 31st December, 2022 remained unchanged by the end of the quarter at 9.90 percent, which was below the return recorded for the period. This demonstrated that the purchasing power of pension funds were preserved. 

Total contributions2 decreased from K615.36 million as at 30th September 2022 to K452.678 million as at 31st December 2022. This represented a reduction of K158.68 million or 25.79 percent as opposed to the previous quarter were there was an increase K15.28 million or 2.55 percent. The main reasons for the reduced contributions were mainly as result of reduced special deficit funding (K72.69 million) and transfer from other funds (K59.97 million).

Contribution arrears to pension schemes from the respective sponsoring employers increased from K411.01 million as at 30th September 2022 to K445.03 million as at 31st December 2022. This represented an increase by K34.01 million or 8.28 percent as opposed to the previous quarter were it decreased by K47.63 million or 10.39 percent. On a year-on-year basis, contribution arrears also showed increased by K9.87 million or 2.30 percent from K435.16 million as at 31st December 2021. The value of the contribution arrears entail an opportunity cost on the average net asset return that would have been realized had the funds been received by the pension schemes for investment purposes. The buildup in contribution arrears is prevalent among employers still suffering the after effects of the Covid-19.

Refunds of contributions for members leaving pension schemes increased by K294.83 million or 109.75 percent from K268.64 million as at September 2022 to K563.47 million as at 31st December 2022. This represents million as at 30th September 202. In the previous quarter, refunds of contributions decreased by K2.69 million or 1 percent. On an annual basis, the statistics still showed an increase in refund of contributions by 31.93 percent from K 427.09 million as at 31 st December 2021.