02 Mar 2016

The growing size of the retirement fund industry has not addressed both pre and post retirement needs of fund members.

Speaking at the Botswana Pensions Society Conference in Kasane , retirement funds manager at the Non-Banking Financial Institutions Regulatory Authority (NBFIRA), Ms Bontle Ndlovu, said as of June last year, retirement funds had a total asset base of P69.9 billion.

“As at this date, 63 per cent of such fund assets were invested off-shore and 27 per cent locally,” she said.

She added that while retirement funds were allowed to invest up to 70 per cent of their assets off-shore, asset managers were expected to take more proactive steps in identifying opportunities locally.

“Pension funds play a critical role in mobilising domestic savings. And due to their long term investment horizon, they are a significant sector in partnering with governments in infrastructure development the world over,” she said, adding that government remained the primary financier of infrastructure projects.

The Deputy Permanent Secretary in the Ministry of Finance and Development Planning, Ms Elaina Gonsalves, said there was inadequate supply of traditional investment instruments to absorb the funds available for long term investment by pension funds.

“The response we get concerning increased placement of investment outside Botswana is that the retirement funds sector has grown faster than the market for long-term debt,” she noted.

She highlighted that there was need for preference in domestic investment of pension funds over off-shore placement. She however said that it is the trustees’ responsibility to optimise investment yield through prudent management of capital.

As such, she emphasised on exploring infrastructure developments due to the long term nature of such projects.

“The P69.9 billion referred to earlier must be made to work in the development of Botswana’s economy,” she said. Ends