THE Insurance and Pensions Commission (Ipec) has established a new administrative framework aimed at streamlining the approval process for offshore investments by pension funds.
As part of this initiative, a tripartite committee, chaired by Ipec and comprising it, the Securities and Exchange Commission of Zimbabwe (SecZim) and the Reserve Bank of Zimbabwe’s (RBZ) Exchange Control Division, has been formed.
The committee will be responsible for evaluating and approving pension fund applications for offshore investments.
According to Ipec, the pensions sector’s total assets increased to a valuation of US$2,48 billion during the first quarter, a 10% increase from December 2024.
This was owing to revaluation gains, new investments and positive fair value adjustments in investment properties and equity instruments.
“We need to manage the risk of concentrated investments in the traditional asset classes,” Ipec board chairperson Albert Nduna said at a symposium and cocktail hosted by CFA Society South Africa, the Institute of Pension Administrators of Zimbabwe and the Zimbabwe Association of Pension Funds.
“Similarly, there is a need for collaboration of our sector with local asset managers, stockbrokers, pension funds and administrators in facilitating offshore investments.
“As the regulator, we have come up with an administrative framework for offshore investments, which will be issued to the market in due course.”
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He said it seeks to streamline the approval process for offshore investments by pension funds.
“In this regard, a tripartite committee comprising Ipec, SecZim, and RBZ Exchange Control has been set up,” Nduna added.
“The committee, which is chaired by Ipec, is now responsible for approving offshore investments.”
He said the new framework would be formally issued to the market soon.
Nduna emphasised the importance of managing risk through diversification, moving away from concentrated investments in traditional local asset classes.
In that regard, he called for collaboration across the financial ecosystem, including asset managers, pension fund administrators, stockbrokers, and banks, to unlock offshore investment opportunities.
The RBZ, Nduna noted, would facilitate foreign currency disbursement for approved investments through authorised dealers.
He also highlighted the need to shift away from the traditional “assets under management” model of remuneration for asset managers owing to the hyperinflationary environment.
“If we maintain this basis for remuneration of asset managers as assets under management, we will continue witnessing a situation where all rental income is going towards asset management fees,” Nduna said.
“The same applies to land banks and some non-performing private equity. Hence, we reiterate our call for the need to strike a balance between remunerating asset managers and protecting trust assets in pension funds.”
He reiterated the need for a fair balance between rewarding asset managers and safeguarding pensioners’ assets and called for collaboration between the capital markets and pension industry.
The symposium was held under the theme Collaborative Solutions for Pension Funds in Zimbabwe.
Investment income for the pensions industry came in at ZiG2 billion during the first quarter from rental income, dividends, interest on investments, profit on disposal of assets and fair value gains.
