Known as the Pension Fund Rule 2 or PFR 2, the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) statute at the moment requires pension funds to invest at least 30% of their assets locally.
Under changes to the Retirement Funds Act, local pension funds will be required to invest a minimum of 50% domestically, a figure that by last week meant the return of P15 billion in pensioners’ assets back home from offshore markets. At the last count, 33% of pension funds, which amounted to about P115 billion, were invested locally.
Government has said the transition will be done on an incremental basis and take no less than five years.
DPF CEO, Gosego January said the pension fund was preparing for the need to return funds home and believed opportunities in property and infrastructure could provide returns that match the offshore market. The DPF is the country’s largest private sector pension fund with assets of P10.1 billion as at January.
“We are saying the returns that we have been getting from abroad can be matched in property and infrastructure here,” she told BusinessWeek. “We are reaching out around that property space and looking where to enhance and this is for the whole country, not just Gaborone. “Infrastructure is something we will also look at because you want to be partnering with government for growth.”
The DPF already owns property at Gaborone Private Hospital together with BIFM, and also has a mall in Francistown as well as more real estate assets in Maun. Last December, the pension fund broke ground for a boutique hotel in Jwaneng whose main tenant is Cresta Marakanelo, the country’s leading hotel chain.
Addressing delegates at the Botswana Pension Society’s annual meeting last week, January urged local pension funds to view the upcoming PFR 2 changes as an opportunity for innovation and not an insurmountable challenge.
“There are a number of countries that have really used their pension assets to boost growth and for us, this is one challenge that we all need to take on and say ‘we are going to do it and differently,’” the CEO said. “We cannot continue to be those cry babies who say ‘where are we going to find assets for this money that’s coming back?’ “Let’s put on our big boy pants and look at the market we are in to come up with a business that can be envied by everyone else.”
She added: “There’s a saying that money will always follow good investments. “We have been going offshore because there have always been good opportunities.
“I’m not saying it’s going to be easy but I’m sure this is going to be a winnable journey.”
NBFIRA’s acting director of retirement funds, Phineas Sesinyi said the regulator had adjusted its limits for certain asset classes that pension funds can invest in, as a way of helping them to find investment opportunities.
“We have just introduced local infrastructure as a new class of investment. “We have also increased the asset limits for private equity and cash holdings and with the latter, it’s because we have seven or eight banks and have always had breaches of limits of cash holdings among pension funds. “We consulted the industry extensively on these changes and the new PFR 2 is an opportunity for innovation. “This is an opportunity to say we want to bring more funds into the country for development and the much-needed jobs,” he said.
Sesinyi added that the planned changes to the PFR 2 are at an advanced stage and their phased commencement will be communicated soon.
