Seychelles Pension Fund presents annual report • 86% of people paid by SPF is earning under R10,000 |14 May 2022
The Seychelles Pension Fund (SPF) presented its audited financial statement and annual report 2021 yesterday to the Minister for Finance, National Planning and Trade, Naadir Hassan.
The report was presented to the minister by the chairman of the SPF board, Marc Houareau, in the presence of the chief executive of SPF, Nishreen Abdul Majid, in a ceremony at Liberty House.
The performance for the year 2021 shows an increase of 1540 (or 3.59%) active members (from 42,901 in 2020 to 44,441 last year).
The SPF has seen a decrease of 0.8% in employers paying pension.
In terms of self-employed there was an increase of 7.55% payment in 2021 and an 11.19% increase in payout for retiring pensioners. That is 5433 retired pensioners in 2021 compared to 4886 in 2020.
Total beneficiaries also saw an increase of 10.66% - from 6501 in 2020 to 7194 in 2021.
The SPF saw a total of 1.5% increase in contributions collected in 2021 which represents R467 million. Pension payouts and benefits increased by 15% (R481million) compared to 2020 which was at R420 million.
Members Fund has had a growth of 1.3% which amounts to R1.74 billion in 2021. Interest credited to the members is 2.42% for mandatory contribution and 5% on voluntary contribution. Amount credited to members for 2021 was R37 million.
The SPF saw a deficit of R14 million in 2021 deduced from when paying and collecting compared to the surplus of R40 million in 2020.
“This deficit is the total contributions which include mandatory and voluntary when compared to total benefit,” the chief executive of SPF explained.
The actuarial method used shows the total deficit is R98 million for 2021 which means that SPF accounts mainly for the mandatory contributions, the administrative costs and the pension benefits paid.
The bulk of the payment of SPF is mainly retirement pensions at 77%, children’s pension is 1%, refunds of voluntary contribution (55years) is 3%, refunds-migration and non qualifying 1%, surviving spouse 6% and permanent incapacity 12%.
The SPF has recorded a surplus of R45 million, a decrease of 30% compared to 2020 which was R65 million.
CEO Abdul Majid said the decrease is due to the concessions given to the tenants in 2021 – from February to December they received 15% concession which contributed to the decrease. SPF also suffered foreign exchange losses in 2021 with the appreciation of the rupee. “This also has had an impact on our investment portfolio assets,” she added.
The fire at the Le Chantier Mall in October 2020 also added to the decrease as the SPF lost rent from October to December 2021.
The SPF had a 3% increase in the net asset value which is R3.5 billion from R3.4 billion in 2020. SPF also completed the Ile Du Port ‘Dream Gate Complex’ and will continue with its other projects such as the Ex-Pirates Arms and the refurbishment of Le Chantier Mall. However with regard to the latter, the board of SPF has not made a decision yet on whether to renovate or rebuild from scratch. The SPF has a total of 25 properties.
For their performance the benefit payment as percentage of contribution is 103% to which the chief executive said shows the reason why the reform was needed as the pension overlapped the contribution by 3%. Property expenses as a percentage of rental income is 23% and rental income is 57% which is the same as in 2020.
The SPF acknowledged that the organisation still faces sustainability issues hence the reason why it is calling for the reforms. There will be an actuarial review in 2022 which will assess the financial position of SPF and a comprehensive review of the SPF Act will also be taken up in 2022.
This year the SPF will not be giving concession on rent and the CEO said they predict that they will gain 100% of their rental income to recuperate the money lost on matters such as refurbishment on Le Chantier Mall as for the year 2021 the SPF had R45 million surplus compared to 2020 which was at R65 million, a significant reduction.
Chairman Houareau stated that the SPF has also not received the shares in companies that have not paid such as banks, both local and international, as they have a moratorium not to pay dividends.
He added that companies such as the Seychelles Breweries also did not pay the dividends.
He also noted that the SPF’s investment in Cable and Wireless, the dividends (R90 million of which SPF has 22%) was paid in 2021 but the money (approximately R19,800,000) will be collected in 2022. This represents over 6% of ROI in Cable and Wireless.
Chairman Houareau explained that the decrease in employer contribution is most likely due to people preferring to start their own business rather than be employed and they are making the voluntary contribution indicated by the increase.
He also stated that decisions have already been made regarding increase in contributions and that since 2018 the issue has been there. “We took a decision that is hard and tough but it is a decision that had to be made,” he said.
Next year the contribution percentage will change, both employer and employee will pay 5% and the retirement age will go from 60 years to 65 years. People will still be able to retire at 60 years old but they will get a payment less than 100% than if they wait for the retirement age.
The SPF is also considering for foreigners to pay pension but the discussion is still underway.
The SPF has also earmarked certain properties for sale, eight in total, of which one at Anse à la Mouche has already been sold. So far Corail D’Or, which has 28 apartments, has only ten tenants leaving 18 empty. The SPF has been advised to reduce the 50% investment of real estate and Corail D’Or is one of the properties earmarked for sale, along with Pension Fund House on La Digue, Clementine at Baie Ste Anne Praslin and more.
The organisation will now focus its efforts more on commercial investments.
Chairman Houareau said the projections for the SPF next year with the extra percentage from the contributions will be in “very good shape”.
Asked about the proposed capped contributions from the government, the chairman said the proposed cap of R50,000 is not a decision they are targeting with the 2022 actuaries. He said that this is a decision that they should look at though not at R50,000 but more. He however acknowledged that it is a tough decision and that about 86% of people paid by SPF is earning under R10,000. He said that not a lot of people earn R50,000 or more per month and that it will be unfair and in a way against the law.
“At some point there might be a cap, but not at R50,000,” he added.