Pension funds beat Covid-19 odds, add over P7 Billion in 2020

The pension funds industry added over P7 billion in the year 2020, maintaining a growth trajectory and beating headwinds in an environment characterized by muted economic activity and subdued business sentiment, the latest Bank of Botswana annual report cited this.

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The industry which is mainly underpinned by government and Debswana employees’ pension funds defied the odds in a trading environment where overall global business and investment shrunk, the industry surpassed the P100 billion mark jumping from P93.1 billion in December 2019 to P105.2 billion as at December 2020.

The pension funds industry continued to record strong growth despite the adverse impact of the COVID-19 pandemic on global and domestic markets. The asset growth mirrored increase in member contributions, net fair value gains and currency revaluation benefits.

 By asset class, investment in domestic equities decreased by 2.1 percent to P16.5 billion in the twelve months ending in December 2020, while holdings of offshore equities and other financial assets increased by 21.2 percent to P52 billion due to the rise in market prices and favourable exchange rates.

Meanwhile, the value of listed domestic bonds held by pension funds increased by 7.6 percent to P9.7 billion, while offshore bonds increased by 5.1 percent to P6.4 billion in December 2020.

 The proportion of assets invested and held offshore by pension funds increased from 59.8 percent in December 2019 to 63.5 percent in December 2020, but remained within the statutory limit of not more than 70 percent. The ratio of assets of pension funds to nominal GDP was 54.7 percent in the third quarter of 2020 compared to 46.8 percent in the corresponding period in 2019.

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