BPOPF yields to pensioners soften

Moakofhi
Moakofhi

The Botswana Public Officers Pension Fund (BPOPF) has declared a 12.25 percent interest rate for its members for 2014 financial year down from 19 percent last year largely due to market fluctuations.

The declared weaker interest is however still the second highest paid to its membership, which now stand at 152,000, since the 2007 peak of 33 percent. Briefing the media in Gaborone yesterday on the Fund’s performance for the 2013/14 financial year, acting CEO Lesedi Moakofhi said that this year’s interest rate, despite being lower than the 2013 dividend, is still a healthy payout for its membership. “This declaration is quite exciting for members following a strong interest of 19 percent declared in 2013. It is quite important for members to note that it is in the nature of markets to fluctuate over time, hence they should expect a fluctuation in the growth of the fund. Past growth should also not be treated as a good indicator of future growth,” she said. In the 12 years of existence, the Fund has only failed to give its members positive returns in two years – one related to the global financial crisis of 2009 and the other to the dot-com crisis of 2001/02. In the period, the Fund’s assets have ballooned to P45.1 billion in 2014 from just P1.9 billion while its membership has equally grown significantly to 152,000 from 22,000 in 2002. BPOPF assets are largely invested in equities, currencies, securities, hedge funds and others, although alternative investment paths are already being formulated. In a bid to promote investment of pensions funds locally, the Fund has under a new investment strategy pioneered private equity and infrastructure investments products. “Institutional investors have never been keen to take an active role in private equity, due to perceived lack of investable opportunities, especially in Botswana. BPOPF believes there is great quality opportunities in the unlisted space that require a private equity partner to unlock,” said Moakofhi. The Fund has earmarked P800 million for domestic private equity investment, with a partner having already been picked for the first tranche of P500 million. A tender is also currently out for the second P300 million tranche. BPOPF is currently establishing an infrastructure fund, which will primarily finance government-backed projects through bond issuance. While asset managers have traditionally preferred the offshore market for its diversity of assets and returns, local pension began drifting homeward early in 2012 due to global uncertainties, the perceived insulation of the domestic market and the introduction of new asset vehicles locally. From an average of 60 percent in the years before 2012, the percentage of pension funds invested offshore dropped to 52.2 percent in March 2012 before reaching a low of 50.3 percent in December of that same year. The proportion of offshore investments has gradually reversed its steps since then with the latest Bank of Botswana figures showing that as at May this year, total pensions funds invested outside Botswana stood at P35 billion representing 58 percent of the P60 billion worth of pensions. By law, local fund managers are allowed to invest up to 70 percent of their Botswana assets offshore. The Non-Bank Financial Institutions Regulatory Authority (NBFIRA) however, hopes to change the law to 70 percent domestic and 30 percent offshore by 2030.

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