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Investments of the National Pension Scheme Authority, ZAMBIA

Investments of the National Pension Scheme Authority, ZAMBIA. Presented by Dann Kunda Musenge Seychelles, October 2006. Introduction. ZNPF from 1966 to 2000 NAPSA came into being 1 st February 2000 NAPSA has custodial responsibility over ZNPF assets and liabilities

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Investments of the National Pension Scheme Authority, ZAMBIA

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  1. Investments of the National Pension Scheme Authority, ZAMBIA Presented by Dann Kunda Musenge Seychelles, October 2006

  2. Introduction • ZNPF from 1966 to 2000 • NAPSA came into being 1st February 2000 • NAPSA has custodial responsibility over ZNPF assets and liabilities • ZNPF was defined contribution and mainly paid lump sums • NAPSA is defined benefit with benefits which are adjusted in line with NAE

  3. Governance Structure • Overseen by Ministry of labour and Social Security • Minister appoints Board • Board is tripartite with some private sector representation by BOZ, BAZ, ZAPFM • Committees - Investment, Staff and Audit

  4. Allowable asset classes • Equities of listed companies • Real estate – residential, office, industrial etc • Government securities- Bonds and Treasury Bills • Fixed term deposits • Fixed income securities – corporate bonds • Collective investment schemes • Offshore investments

  5. Prohibited Investments • Direct lending to Govt and parastatals • Cos without three year profitability history • Cos with wide ownership structure • Speculative investments involving forward contracts, options or other for of derivatives • Holding more than 5% of equity in any one Co • Lending or leasing activities in non-listed entities • Cos that do not observe good corporate governance

  6. Investment Objectives • Capital preservation • Maximisation of investment returns within acceptable levels of risk • Security of assets • Diversification / spread • Liquidity • National development & Social investments - housing, hospitals, schools are not explicitly defined in the guidelines

  7. Asset Allocation Rules • Asset allocation rules ( what % ranges should be applied to each asset class in the portfolio) • Planned to have up to 30% of the total fund invested offshore

  8. Offshore Investment • Appointment of Global Custodians – advanced two institutions shortlisted • Appointment of External Fund Managers – awaited • Appointment of International Trustee – awaited • Consultative process on-going

  9. Social Investments • Mainly in real estate developments • Increasing calls to support Infrastructure type investments • Policy guidelines required and harmonisation of governance regimes • Special Purpose Vehicles being created

  10. Conclusion • Challenges of balancing scheme member priorities with the competing calls to support social investments • Review of Investment Guidelines and Asset Allocation Rules • Limited investment opportunities, underdeveloped market, illiquidity nature of some investments, absorptive capacity etc • Consultations on-going

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