Seychelles Pension Fund on the right track thanks to reforms |26 May 2023
Ms Mangroo accepting the report from Mr Houareau in the presence of Ms Abdul Majid (Photo: Patrick Joubert)
Chief executive of the Seychelles Pension Fund, Nisreen Abdul Majid, has said the fund is on the right track thanks to the reforms that took place in terms of increase in personal contributions of workers and employers and increase in retirement age from 63 to 65 years.
She made the statement to the press following the presentation of the Seychelles Pension Fund (SPF) annual report 2022 to the Ministry of Finance, National Planning and Trade in its conference room yesterday afternoon. The report was handed over by the chairman of the SPF board, Marc Houareau, to the executive director in the minister’s office, Cillia Mangroo, who was standing in for Finance, National Planning and Trade Minister Naadir Hassan.
According to the report, the SPF recorded a surplus of R478 million in 2022 compared toR19 million in 2021. An important source for the good performance was an excess contribution of R47 million over the pension pay-out during the year, which compares to a deficit of R15 million in 2021.
“This confirms that the reform that the Seychelles Pension Fund initiated in 2022 was necessary and is on the right track,” said Mrs Abdul Majid.
Overall, the total contribution received in 2022 was R646 million compared to the total pension of R599 million paid out. The situation should continue to change positively in 2023, considering the ongoing sustainability measures and reforms taking place. The net assets of SPF grew by over 17% between 2021 and 2022, and this is largely driven by a strong investment performance.
SPF’s audited financial statements reported material capital gains from investment in equities and investment income. Dividends from local companies grew considerably by 161 percent, from R21 million in 2021 toR55 million in 2022. Rental income increased from R94 million in 2021 to R98 million in 2022, representing an increase of 4 percent.
The DreamGate complex which was completed in May 2022, has been added to the pool of SPF’s commercial properties bringing the total properties to 25. A diversification strategy of the institution’s investment portfolio remains a key element for its long-term success and this is progressing well.
Total benefits paid out have increased by 24% from R482 million in 2021 to R599 million in 2022. There is also an increase of 13% in the number of beneficiaries from 7,194 to 8,135. Retirement pension remains the leading benefit payment, representing 77% of total benefits paid for the year. The 6,229 retirement pension beneficiariesaccount for an increase of 15% from 2021, which is the highest over the last five years.
The interest rate declared for the year 2022 is 2% on mandatory contribution and 4% on voluntary contributions. It is to be noted that the mandatory contribution for employees has increased from four (4) percent from April 2022 to five (5) percent as from January 1, 2023 while employers’ contribution remains at five(5) percent as at April 2022.
Mrs Abdul Majid said had the reforms to mandatory contribution for employees (from three (3) percent to four (4) percent and employers from four (4) percent to five (5) percent effective April 1, 2022) not implemented, and had it remained at 6% for both employers/employees, the deficit of R14.7 million recorded at end of 2021 would have increased to R132 million at end of 2022. She noted that would also have impacted on the pension payment where payment was R599 million, the same paid out in 2021,where the deficit was lower, among impacts on expenditure.
“So the change in contribution rate was a good decision in terms of sustainability of the pension fund where we managed to come back to a surplus position,” she said.
As at December 31, 2021, SPF had 44,233 active members, 3,585 in terms of active employers and 2,722 and 9,247 self-employed and voluntary contributors respectively. SPF is attending to 8,134 beneficiaries for all pension types among whom are 6,229 retirement pension beneficiaries, 990 permanent incapacity beneficiaries, 702 surviving spouse beneficiaries, and 213 children pension beneficiaries.
The second phase of the reform involving a comprehensive review of the SPF Act is expected to be finalised by end of 2023 while the investment diversification strategy, started in 2021, is still ongoing. The Pirates Arms and Le Chantier Mall projects are expected to commence by end of this year. The SPF is also expected to receive the actuarial report for the next three years, by mid-year of this year also.
Speaking on the actuarial report, SPF board chairperson Marc Houareau said the SPF reforms were stated in the report in 2018. He noted that had the reforms been done then, the situation might have not been as it is today. He added that SPF is waiting for the report assessment to know of the changes that will have to be amended.
With regards to accusations of corruption within the SPF associated with the buying of shares in companies, Mr Hoareau said there is no corruption in the buying procession as both parties do their due diligence and although it is a risky business affair, the SPF took the best offers which up to now have yielded benefits.
He stated that investing in companies is a part of the organisation’s long term investment strategy.
Patrick Joubert / Press releaseSPF