IMF rep urges pension funds to take more risk

Wednesday, April 06, 2011

Senior International Monetary Fund (IMF) Representative to Jamaica Dr Gene Leo, has called for pension fund managers to take on more risks to yield higher returns, while exercising good governance.

Leon, who was the keynote speaker at the Sagicor Pension Investment Seminar held last Wednesday at the Jamaica Conference Centre, said that the challenges in the Jamaican economy represent opportunities for prosperity, by carefully identifying areas for investment in anticipation of an uptick in the future.

At the same time the IMF representative contends that the "financial sector risk appears to be contained".

Good corporate governance, once seen as a constraint, can lead to the enhanced returns, by his reckoning.

Exercising good governance as "top priority can lead to increased wealth", Leon said. The model of governance is a self-regulatory guideline that can be a cost saving measure as it removes the need for any outside monitoring agencies.

Leon emphasised the need for monitoring the compensation offers for fund managers saying they need to be based on an adjusted risk returns incentive. In addition, he recommended appointing only independent board members to reduce conflicts of interest.

Richard Byles, President and CEO of Sagicor Life Jamaica who also spoke to the gathering of Pension trustees at the Seminar, outlined the financial health of funds managed by the institution and commended the investment team on the 2010 performance of these pension funds.

"Our funds did very well versus inflation, eight out of nine of our funds beat inflation," Byles said.

Despite the challenging environment of low interest rates, the Sagicor Life Jamaica pension portfolio has shown positive returns.

Sagicor Life Jamaica Limited is the leading life and health insurance and pension Management Company in Jamaica. The Company holds group pension plans, with funds of $69 billion under management, making Sagicor the industry leader in the pension funds management by a life insurance company in Jamaica.

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COMMENTS (4)

Dorlan Francis
4/7/2011

Great advice sir. These guys are sitting on TRILLIONS of dollars chasing after paper investments while foreigners are buying up our power generating plants. They sit on these large sums of money while 80% of our graduates from the UWI have to migrate to make a living. These so called money managers MUST be taught the ESSENCE of ECONOMICS

Desalini Denniston
4/6/2011

Ignore this foolish advice. Look at how many old and vulnerable persons were wiped out in the US in 2008, never to recover after working all their lives. A number of fund managers in Ja have been talking about introducing derivatives and CDOs to the financial market. These investment vehicles wiped out trillions of US$ in wealth, making billionaires of a few while bankrupting the masses. These industries make no goods, provide a shady service yet pull billions of dollars out of thin air. RED FLAG!

nervous investor
4/6/2011

PHD Yeah ? .. like when the Government of Jamaica encouraged the banking sector into farming and tourism etc back when. Then when the same GOJ hiked interest rates through the roof and bankrupted the Banks' customers then it was said that inter alia they had an asset and liability mis-match. Once cannot listen to these learned dunces .... so full of book learning and so short on real life experience. Pension Funds must be inherently risk averse with a minimum of funds at higher risk.

Maxie Reid
4/6/2011

yes like buying us bonds and portugal bonds.....that set to crash like fowl feather.......please. They themselves are starving off the government from creating incentives to foster growth of the private section but at the same time advising us to take risk with people pension money. I hope sagicor just laugh with him and thats it...a laugh

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IMF rep urges pension funds to take more risk