Assets Of Pension Funds’ Reach $35 Trillion

  • Global pension funds defeat COVID-19 storm
  • BPOPF grows in leaps and bounds

GAZETTE REPORTER

Global pension funds have put in a sterling performance with their assets hitting USD trillion in 2020 against odds presented by the COVID-19 pandemic.

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According to Pension Funds in Figures June 2021 survey conducted by the Organisation for Economic Cooperation and Development (OECD), pension fund assets exceeded USD 35 trillion at end 2020, increasing despite COVID-19 in almost all countries except those facing significant early withdrawals.

“Earnings in financial markets underlie the growth in assets, equities and bonds accounted for a nearly 75% of pension fund investments on average at end 2020.The outlook for pension funds is relatively positive for Q1 2021,” said one of the world’s largest publishers in field of economics, OECD.

The local pension fund, Botswana Public Officers Pension Fund (BPOPF), was also profitable in the year 2020, recording an impressive solid performance of 26 percent growth. Briefing the media earlier this month, BPOPF Chief Executive Officer (CEO), Moemedi Malindah, noted that the fund’s financial value grew from P59 billion in 2019 to P75 billion in 2020.

“Furthermore, the 2017-2022 investment strategy also contributed to significant growth. The COVID-19 pandemic also took us by a surprise but the board strategised so very well to ensure that the fund is sustained. Offshore equities grew from P34.8 billion to P50 billion,” he said.

The attackers of growth included both offshore fixed income and local fixed income. BPOPF Board Chairman, Solomon Mantswe, said BPOPF’s assets have been certified to actually exceed its liabilities with its funding level standing at an exceptional 100.8 percent.

The 100.8 percent funding level, Mantswe said, effectively means that the fund has sufficient assets to discharge all its financial obligations to the member, given the uncertain period of the COVID-19.

Mantswe said they have to contend with the strong onslaught of the pandemic which remains a challenge, especially to member education, outreach and engagement programmes.

Meanwhile, the OECD pointed out that pension fund assets continued to rise in 2020 in almost all countries. According to the organisation, this increase was supported by capital gains in financial markets and government measures that helped members to continue participating in their pension plans.

“Some of the strongest asset rises in nominal terms occurred in Georgia (over 100 percent) where participation in a 2nd pillar pension scheme has become mandatory since 1 January 2019, and France (84 percent) where insurance companies have started creating and transferring the pension business to FRPS (i.e. a newly authorised vehicle that is a pension fund),” the OECD said.

The survey indicated that pension funds achieved positive investment returns in most reporting jurisdictions in 2020 overall, despite the sharp fall in stock prices in Q1 2020 in major financial markets, the rise in unemployment and the deep GDP shrinkage.