Strong investment returns lifted the Botswana Public Officers Pension Fund’s (BPOPF) assets under management by 10.3 percent to P128.34 billion in the year ended March 2026, moving the fund closer to its P133 billion target by March 2027. However, the performance came against a backdrop of slowing contribution growth as weaker government recruitment reduced the pace at which new money flowed into the fund.
Chief Executive Officer Kwenantle Otukile attributed the fund’s performance to its deliberately diversified investment strategy, which spreads capital across multiple asset classes, sectors and geographic markets to reduce risk while maximizing long-term returns.
During the financial year spanning April 2025 to March 2026, portfolio growth was heavily weighted toward equity gains and international fixed income. Offshore equities remained BPOPF’s largest asset class, increasing by P2.07 billion, or 3.64 percent, from P56.93 billion in FY2025 to P59.01 billion in FY2026, underscoring the fund’s continued reliance on international stock markets.
Local equities recorded one of the strongest gains, rising by P4.60 billion, or 23.57 percent, from P19.52 billion to P24.12 billion, while local fixed-interest investments grew by P832.16 million, or 4.86 percent, to P17.94 billion. Offshore fixed-interest investments surged by P4.02 billion, or 83.63 percent, from P4.80 billion to P8.82 billion, signaling a substantial increase in exposure to international bond markets.
Elsewhere in the portfolio, investment property grew by P519.27 million, or 38.81 percent, from P1.34 billion to P1.86 billion, while cash and cash equivalents rose by P303.48 million, or 80.43 percent, to P680.82 million, strengthening the fund’s liquidity position. Private equity was one of only two asset classes to contract, declining by P187.51 million, or 3.54 percent, from P5.30 billion to P5.11 billion. Money market securities also fell, dropping by P252.78 million, or 2.37 percent, from P10.68 billion to P10.43 billion, a modest reduction in short-term liquid investments.
This asset expansion and diversification directly improved member outcomes, filtering through to the annual interest rates declared for member portfolios. The Active and Deferred Members Portfolio, for members still actively in service who have not yet reached retirement, posted an interest rate of 11.10 percent, up from 6.84 percent a year earlier. The Pre-Retirement Switch Portfolio, designed with a low-risk profile for members nearing retirement, increased to 8.27 percent from 6.12 percent. The Tshomarelo Portfolio, aimed at members seeking a moderate-risk investment option near retirement to capture market upside while maintaining balance, returned 10.75 percent, compared with 6.5 percent the previous year. Conversely, the With Profit Pensioner Portfolio, which prioritizes preserving long-term financial security while providing stable returns, decreased to 4.20 percent from 5.00 percent in the prior year.
Despite strong asset growth, the fund is navigating headwinds as contribution growth recorded its weakest performance in five years. Contributions remain a key growth engine, providing the baseline capital subsequently invested to generate returns. However, Otukile noted that contribution growth slowed as government recruitment moderated. Over a five-year horizon, members’ contributions rose consistently, climbing from P3.89 billion in 2022 to P4.17 billion in 2023, P4.65 billion in 2024, P4.82 billion in 2025, and P4.85 billion in 2026. While total contributions reached new highs each year, annual increases slowed significantly from P481 million between 2023 and 2024, to P171 million in 2025, and just P25 million in 2026, indicating that growth has largely leveled off.
“Financial year 2026 saw contributions increasing at a decreasing rate in comparison to prior years, largely due to government recruitment trends. As the government slowed down in terms of recruitment, it directly impacted the volume of contributions we received as a fund,” Otukileexplained.
Compounding the plateau in contributions, cash outflows accelerated substantially. Benefits payments rose sharply during the period. Total benefits paid climbed by 39 percent to P6.35 billion, from P4.55 billion in the previous financial year.
In response to regulatory shifts, BPOPF is executing a deliberate strategy of domestic asset repatriation. BPOPF’s local allocations have tracked closely alongside regulatory minimums established under PFR2 and NBFIRA rules, posting 39.34 percent against a 38 percent minimum in December 2023, 41.67 percent against 41 percent in December 2024, 45.74 percent against 44 percent in December 2025, and reaching 46.21 percent by March 2026 toward a 47 percent target by December 2026.
“We have been able to repatriate funds at a more structured pace and approach, ensuring we still secure the returns intended for our members,” Otukile said.
This strategy has yielded an increasingly localized portfolio. In line with its investment strategy, the fund implemented several new mandates, including two under its flagship incubation program. Designed to foster local capital market development, the program builds emerging local asset management entities to compete nationally, regionally and internationally. During FY2026, BPOPF appointed two asset managers for private equity incubation and one manager for local equity incubation. Additionally, the fund awarded mandates for Africa Equity and Inflation-Linked Bonds across both South Africa and Botswana, appointing two managers in South Africa and two in Botswana.
However, strategic expansion and localized investment management have come at a cost. These extensive investment and strategic management activities contributed to a surge in fund expenses during FY2026. Total fund expenses rose, growing from P856.99 million in FY2025 to P1.145 billion in FY2026, an increase of P287.79 million, or 33.6 percent. Consequently, the cost-to-AUM ratio rose from 0.74 percent to 0.89 percent.
“While we engage in investment activities to pursue target returns for our members, we do so at a cost. There is an expense element tied to paying asset managers and consultants, alongside running operational activities required to reach our goals,” Otukile noted, reinforcing that the fund continually aims to maintain an overall cost ratio below 1 percent of AUM.
Beyond investment management, costs were driven by strategic execution surrounding service delivery, including digitizing services and entering strategic partnerships to enhance member education.
Crucially, despite rising expenses and narrowing net cash inflows, the fund’s balance sheet strength remains secure. BPOPF’s funding position stayed above 100 percent throughout FY2022 to FY2026. While the solvency cushion narrowed to 100.8 percent in FY2024, down from 101.7 percent in FY2022 and 101.4 percent in FY2023, it steadily recovered to 101.9 percent in FY2025 and 102.9 percent in FY2026.
