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PSPF LOSES E3 BILLION RETURNS ON INVESTMENTS

03/02/2021 08:54:00 BY SIBUSISO ZWANE

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MANZINI – Civil servants lost returns on their investments worth E3 billion due to COVID-19.

The investments are made by the civil servants’ pension fund; the Public Service Pension Fund (PSPF).

This is contained in the PSPF 2020 annual report. The actual amount of returns which was lost due to COVID-19 was E3.25 billion, which is E250 000 less than the budget allocation of the Ministry of Education and Training as awarded by the Minister of Finance, Neal Rijkenberg, in the 2020/21 budget allocation. The ministry was awarded E3.5 billion.

The report states that the fund recorded revaluation losses of E3.25 billion mainly from the foreign portfolio, due to the pandemic.

Uncertainty

“The losses are mainly attributed to stock market uncertainty on the advent of coronavirus. After the World Health Organisation (WHO) declared the novel coronavirus a pandemic, investors started disinvesting from emerging markets, plummeting the value of related shares in those markets,” reads part of the report.

The summary performance report stated that from experience of all previous stock markets crashes, the management of PSPF kept their heads down and waited for the markets to settle.

The management reported to the public workers that in all the previous market crashes, the biggest losses were incurred by those who made panic sales, as they missed out on market recovery.

It was further reported that the markets had started to recover and PSPF was confident that it would recoup losses incurred by the fund in subsequent periods.

“As a result, a deficit of E1.13 billion was recorded in the period under review, compared to a surplus of E1.64 billion which was observed in the previous year,” reads the report.

Consequently, the fund said its net assets decreased by five per cent from E23.29 billion to E22.16 billion.

On the other hand, the PSPF reported that there were revenue increments worth 37 per cent as money invested in the South African-based portfolio realised profits from E2.63 billion to E3.60 billion.

Selection

It was said the coronation asset management contributed E1.20 billion due to good stock selection. The report further stated that in the case of the domestic portfolio, the high vacancy rate had an adverse impact on rental income, while pension contributions were almost stagnant as they decreased by 0.2 per cent during the year under review.

Again, according to the report, a total of E1.187 billion was received as contributions for 42 130 members. In the previous financial year, the fund had received E1.189 billion for 42 979 members.

Contributions decreased by E2 million, which translates to a 0.2 per cent decrease.

Also, in terms of domestic portfolio capital investment, the fund injected E762 million in the Kingdom of Eswatini during the year under review. It said the cash injection was mainly for hospitality, agriculture and retail sectors to support the economy and create employment.

On the other hand, regarding administration expenses, the fund said these increased by four per cent from E240 million last year to E250 million. It said the cost containment strategy implemented under the new leadership was paying dividends.

Again, the fund said benefits awarded to members increased by five per cent to E1.24 billion and this was attributable to the cost-of-living-adjustment (CoLA) awarded on pension annuities.

It said direct property capital investment increased by five per cent to E882 million.

The fund also highlighted that it added a conference facility to the Hilton Garden Inn and it was ready for use from September 2020.

Meanwhile, the Chairman of the PSPF Board of Trustees, Sammy Dlamini said they presented the 2020 annual report in the backdrop of the a unprecedented new global environment brought about by the COVID-19 pandemic, which had engulfed all the economies of the world, not sparing that of the kingdom.

Positive

He said for a good financial run, which saw them achieving positive investment returns of 36 per cent above the previous year, was later curtailed by the performance downturn due to COVID-19.

He said it brought about adverse revaluations of portfolio stocks and counters in the investment space.

However, Dlamini said he was pleased to report that subsequent to the March 2020 crash, financial markets had rebounded and they were starting to observe returns to pre-COVID-19 levels in most of their investment portfolios.

In that regard, he said with market confidence restored, they were expecting improved profitability in most of the sectors where they have invested and they remained positive of recouping the short-term losses suffered.