Pension funds spend Sh2tr on investments in one year

Dar es Salaam. The value of investments by the pension funds in various income-generating operations in Tanzania rose by 20 per cent in one year alone.

The underlying objective of boosting the investments is to increase the pension schemes’ incomes so as to enable them to better meet their obligations to their contributing members.

A report by the National Bureau of Statistics (NBS) shows that the pension funds directed Sh1.946 trillion up various investment avenues during the 2016/17 financial year alone.

This brought the total amount invested by the Funds to Sh11.2 trillion, up from Sh9.3 trillion in the preceding year.

Six different pension funds invested a total of Sh1.119 trillion into various profit-making ventures during the 2016/17 financial year, out of the total sum of Sh1.946 invested that year.

The six pension funds’ total investments alone reached Sh7.922 trillion in 2016/17, up from Sh6.804 trillion in the preceding year.

The six major investors were the National Social Security Fund (NSSF), the Workers Compensation Fund (WCF) and the Public Service Pensions Fund (PSPF), which operates the PSPF Main Scheme and the PSPF Supplementary Scheme – membership of the latter Scheme being voluntary.

The other three are the Local Authorities Pension Fund (LAPF), the Parastatal Pensions Fund (PPF) and the Government Employees Pensions Fund (GEPF).

However, all these pension schemes have since been merged under the Public Service Social Security Act (2018) to form the Public Service Social Security Fund (PSSSF), which now boasts a total of Sh5.518 trillion in assorted investments.

PSPF emerged as the fund with the highest annual increase in the invested amount. Naturally enough, this should correlate with increased returns. PSPF’s value of investments exponentially grew by 49.8 per cent within one year, rising in value from Sh921 billion in the 2015/16 financial year to Sh1.38 trillion in 2016/17.

WCF, LAPF and GEPF came in second, third and fourth in that order. This is in percentage terms of the annual growth of their respective investments.

In actual monetary terms, however, NSSF emerged as the fund with the highest amount of invested funds during the year under consideration. NSSF’s total investments reached Sh2.334 trillion in 2016/17, from the Sh2.328 trillion that was held in assorted investment portfolios during the preceding financial year.

NSSF has invested massively in government securities: Sh311.2 billion in 2016/17, up from Sh254.9 billion in 2015/16. Apart from government securities, the pension funds also invest in real estate, collective investment schemes, corporate bonds and equities.

With the ongoing industrial drive, the pension funds are counselled to get into production activities.

To that end, NSSF and PPF had collaborated on a sugar production project at the Mkulazi Sugar Farm in Morogoro Region to produce 30,000 tonnes of sugar annually beginning in January 2019.