Private pensions now valued at $674 billion as assets grow slowlyWednesday, October 13, 2021
The Financial Services Commission (FSC), which regulates players in the private pensions industry, indicates that the latest data compiled, for the March 2021 quarter, show that industry assets increased by 1.74 per cent, compared to the year before.
In its March 2021 report, the FSC stated, “Plan membership and pension coverage increased during the quarter and the majority of pension plans had strong solvency positions.” As at March 31, 2021, the total value of assets in the industry amounted to $673.97 billion.
The regulator says that the industry experienced an average growth of 2.81 per cent per quarter over the past five years. During the quarter, total membership reported for private pension plans also increased by 3.23 per cent.
Security dealers continued to account for the largest number of active plans and managed the largest portion of assets valued at $370.10 billion which represented quarterly growth of 1.96 per cent.
Two life insurance companies had the second largest portion of private pension assets under management as at March 31, 2021, totalling $249.11 billion. Together, dealers and insurance companies accounted for approximately 92 per cent of private pension assets. The remaining assets were managed by two credit unions and six other investment managers.
The fastest-growing segment of the industry is $54.19 billion was attributed to 13 retirement schemes, which grew by 3.48 per cent from the $52.36 billion reported as at December 31, 2020.
Membership in retirement schemes also continued to grow at a faster rate than SF — 4.64 per cent and 2.92 per cent, respectively.
The Jamaican employed labour force also saw a 3.53 per cent increase during the period. Both increases resulted in a negligible growth of 0.17 per cent in private pension coverage to 11.56 per cent for active plans; while total private pension coverage was 11.75 per cent as at March 31, 2021.
Pooled investment arrangements remained the largest asset class (37.33 per cent ) with total invested assets valued at $251.51 billion during the quarter. Conversely, equity investments (22.62 per cent ) surpassed investments in Government of Jamaica securities (21.71 per cent ) to regain its position as the second-largest asset class, a position first held in 2019.
Direct investments in stocks and shares also experienced the largest growth (5.68 per cent ) during the quarter. As at March 31, 2021, investments in stocks and shares and GOJ securities valued $152.40 billion and $146.25 billion, respectively.
Marginal movements were noted for direct investments in the remaining asset classes, with the exception of investments in mortgages which bore a reduction of more than 50 per cent during the quarter.