- But growth in contributions remains sluggish
Botswana Public Officers Pension Fund (BPOPF), one of Africa’s largest pension funds, recorded a 5 percent increase in assets under management, driven in part by the recovery in markets after China eased its hard COVID-19 induced lockdown.
The funds’ annual report shows that Asset Under Management (AUM) grew from P88.6 billion in 2022 to P94.3 billion in 2023, as offshore performance improved.
“Global equity and bond markets performed well over the year 2022 and into the quarter ended March 2023, boosted in part by China’s quick reopening following the end of strict COVID-19 lockdowns,” the report says.
Local markets also contributed significantly to the growth in the Fund asset base given the strong performance in the domestic equity markets.
“Growth in contributions into the Fund remained low over the financial year to 31 March 2023 in line with active member numbers which remained flat,” the report says.
The BPOPF’s accumulated funds and reserves amounted to P83.3 billion, a growth of 5 percent from the 2022/2023 financial year and the increase is due to favorable increase in private equities and improved local equities in the financial markets.
The Fund collects a portion of members’ pensionable salaries as contributions. During the reporting period, these portions received increased by 6.9 percent rising from P3.9 billion in 2021 to P4.2 billion in 2023. According to the report, this increase can be attributed mainly to members’ annual salary increments and the addition of new entrants to the public service.
BPOPF’s outgoing chairperson, Solomon Mantswe lamented a challenging trading environment faced by the Fund but noted an improvement in March this year.
“We remain vigilant to ensure that our Fund continues to withstand the environmental and financial market turbulences that are inherent in our line of business,” he said.
Notably, Mantswe said, the BPOPF’s assets exceed the liabilities with the funding level standing at 101.4 percent compared to 101.7 percent and 100.8 percent in 2022 and 2021 respectively. He said, this ultimately means that the Fund has sufficient assets to discharge all its financial obligations to the members.
“Furthermore, the Fund has maintained very healthy reserves across its portfolios.”
For his part, BPOPF Chief Executive Officer Moemedi Malindah said although the past year has been difficult, the Fund has shown resilience as the positive performance was realised by March 2023 across all portfolios despite negative results during the first three quarters of the year.
“Volatility is always inevitable; we however take a long-term view to performance and have confidence that our investment strategy is robust enough to carry the Fund through tough periods characterized by market shocks and other disruptions,” said Malindah. He added that “ Overall, our Fund is in a healthy state and continues to be in a fully funded position.” He assured their members that when they retire, “we will be able to settle the Fund’s long-term liabilities by making the necessary payouts without default.”
The report shows that the number of withdrawals increased by 1, 524 mainly because of the resignation of nurses to seek better opportunities internationally. The report says given the turbulent market conditions experienced in 2022 and the spillover into end of the first calendar quarter of 2023, the Fund’s long-term outlook remains anchored in its investment strategy and expects that global assets remain an attractive alternative, especially after the recent slip in performance.
BPOPF expects there to be greater opportunities within the equity markets that the Fund is currently exposed to. Despite a choppy beginning to the Fund’s financial year in terms of returns, BPOPF said the patience bore fruits in the performance now being reported at the end of the year. It believes that its broadly diversified portfolio will offer members the best chance of meeting their retirement goals when their time to retire comes.