Pension funds cash pile worries regulators :: Mmegi Online

Financial regulators have expressed concern over the continued holding of large cash balances by pension funds, warning that the trend is concentrating deposits within commercial banks whilst limiting the amount of long-term capital reaching infrastructure and other productive areas of the economy.

Both the Bank of Botswana (BoB), which regulates commercial banks, and the Non-Bank Financial Institutions Regulatory Authority (NBFIRA), which oversees retirement funds, believe more pension capital should move beyond bank deposits into longer-term investments.

The concern is not that pension funds or commercial banks should not hold cash, but that large institutional deposits have remained a persistent feature of the financial system even as billions of pula have been brought back into Botswana under Pension Fund Rule 2 (PFR2). Pension funds held P14 billion in cash as at June, compared with P23.3 billion invested in locally listed equities. Total industry assets stood at P176.4 billion during the period.

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pension funds

Pension funds cash pile worries regulators

Financial regulators have expressed concern over the continued holding of large cash balances by pension funds, warning that the trend is concentrating deposits within commercial banks whilst limiting the amount of long-term capital reaching infrastructure and other productive areas of the economy.

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