68 PER CENT LOCAL RETIREMENT FUNDS ASSETS INVESTED IN JSE

MBABANE – Swaziland continues to be minimally vulnerable to external shocks as in the foreign markets, retirement funds assets are heavily invested in equity instruments with 68 per cent through the Johannesburg Stock Exchange (JSE).

This is unlike in the local market, where the majority of funds are invested in the money markets and in debt maturing within 12 months (31 per cent).

The Central Bank of Swaziland financial stability report states that overall, this shows that pension funds’ preferred investment instruments are equity (51 per cent), debt maturing after 12 months (19 per cent), and the money market and debt maturing within 12 months (13 per cent).

It should be mentioned that pension funds are categorised as systemically important (Non Bank Financial Institutions in (NBFIs) in Swaziland.

CBS notes the retirement funds industry plays a significant role in the country’s financial system as measured by the ratio of their assets to Growth Domestic Product (GDP), which stood at 48.2 per cent as at  December 31, 2016 - the highest when compared to all the other sectors within the financial system.

It was explained that the retirement funds industry comprises 70 stand-alone funds, 9 umbrella funds with 127 participating employers and 5 benefit administrators.
“The industry is dominated by the Public Service Pensions Fund, which constitutes 76.9 per cent of total assets, followed by the Swaziland National Provident Fund with 7.7 per cent (E2 billion),” reads the report in part.

It was pointed out that the retirement funds industry remained well capitalised and relatively well diversified in terms of asset allocation, consistent with the maturity profile of their liabilities.

On the latter, the industry complies with the 30 per cent local asset holdings requirement, with 36.8 per cent of total assets invested in the local market, and the difference invested mainly within the CMA (predominantly South Africa).

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