Pension assets at 16% of Gross Domestic Product

post was last updated: November 8, 2019
CHIHANA—We have done very well

Pension assets have been growing in the past eight years and now stand at K825.3 billion, representing 16.3 percent of the Gross Domestic Product, figures from the Reserve Bank of Malawi (RBM) show.

The passing of the Pensions Act in 2011 has seen a substantial rise in pension remittance.

The pension assets were seen at K716.5 billion, at end of 2018.

According to RBM Chief Examiner for Life Insurance and Pension Funds, Kaluso Chihana, quarterly pension contributions are now around K25 billion.

In his presentation to the Institute of People Management Malawi conference on Saturday, Chihana, however, lamented low flow of the funds towards infrastructure development projects.

Figures he presented show that of the amount, 45 percent is in listed equity, 12 percent is in fixed deposits, 12 percent is in long-term government debt which short-term government debt constitutes of 9 percent.

The figures also show that only 4 percent of the funds is channelled towards property development with another 4 percent in other investments.

Chihana said growth in assets has not translated into investments in infrastructure.

“We have done very well to accumulate the savings but to translate them into infrastructure investment has been a bit of a challenge,” he said.

RBM projects that by end 2019, pension assets would swell to K894 billion and increase further to K1.1 trillion by the end of 2020.

Recently, the Organisation for Economic Cooperation and Development indicated that alternative investments had gained ground world over, with the percentage of assets committed to alternative investments reaching 51.3 percent in South Africa, 51.9 percent in Tanzania and 40.3 percent in Zambia, by 2017.

In Tanzania and Zambia, land and buildings alone constituted 24 percent and 21 percent, respectively.

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