2021 – Seychelles Pension Fund celebrates 15 years |29 January 2021
Maison Collet is one of the most recent SPF real estates in Victoria
“Seychelles Pension Fund (SPF) celebrates its 15th anniversary in January 2021. Having well established itself as the national pension fund of the country for the last decade and a half, it is now time to shift gears and move to a new level,” says the chief executive of SPF, Mrs Lekha Nair.
“Moreover, to succeed post Covid-19, the next couple of years will be challenging for SPF as it will be for the Seychelles economy. SPF’s business objectives need to balance current challenges and future opportunities, having built a strong foundation for the last six years that I have been the CEO.”
“In my opinion, SPF will need to maintain fiscal discipline to ride out the rest of the slowdown, while also starting to strategise ways to capitalise on the opportunities the next promising years will present. One of the concerns highlighted in the last actuarial valuation done up to 2018, was the need to start making SPF more sustainable for the future, as projections showed that with current contributions rates and normal increasing pension pay-outs, sustainability for the 60 years period was questionable, unless the correct and timely measures are taken.”
“Therefore, the building up and management of SPF’s reserves, guided by the imperative of smoothing out the demographic effects of an ageing population, needs to be the key focus for the next few years for SPF. Large unfunded pension liabilities have serious implications, and for the most part, it is the growing awareness of these implications that is driving recognition of the need to set aside assets to cover at least part of future pension pay-outs. Also pension investments are becoming ever more diversified with sophisticated investors, expanding their reach into new geographies and asset classes. While yields and the development of internal capacity remain significant challenges, these trends appear set to continue even as the pandemic’s shockwaves ripple through global market. SPF too needs to join them, not to be left behind,” concludes the CEO.
It is of absolute essence today, to navigate SPF over the next couple of challenging years, where the right decisions need to be made for SPF’s sustainability and for prudent investments of surplus funds. Moreover, in such challenging times, there is a strong need for continuity and steadiness in the management of SPF.
- SPF’s Performance
1) Membership and Beneficiaries
In 2006, the total SPF membership, comprising Seychellois workers working in Seychelles, was at 33,505, with a total number of beneficiaries from SPF of 362. Today our membership is 42,901, an increase of 28%, while we pay out pensions to 6,501 beneficiaries, a growth of almost 1700%. In 2020, pension amount paid out was R401 million, the highest pay-out since SPF was set up and to the highest number of beneficiaries.
2) Contributions paid in and benefits paid out
The total amount of contributions for 2020 at R450 million is the highest collected so far. Over the 15 years, SPF also introduced a voluntary contribution scheme, and in 2020 we collected R36 million from 8,827 contributors, the highest so far.
SPF today has a record number of 5,853 registered employers including 2,357 self-employed, showing that Seychellois workers and employers recognise the important role of SPF.
In 2020, SPF collected R450 million and made a pension payment of R401 million, both being the highest to date.
3) Investments
In 2006, when SPF commenced its operations, its net assets stood at R566 million, which in 2020, has grown by 600% to R3.6 billion.
SPF continues to focus on investing its surplus funds with the aim of increasing its second source of investment income. SPF also achieved the highest degree of diversification of investments across asset classes since its existence and achieved the highest level of investment income surplus (without fair value and depreciation) of R53 million in 2019, increasing total net asset value by 26% to an all-time high of R3.3 billion as at end of 2019.
SPF has surpassed its investment income budgeted and its investment returns is at an all-time of 11% for 2020, due to the positive effect of the foreign exchange gain, having done currency hedging. SPF has also diversified further its investment portfolio in line with its Investment Strategy, with 45% in real estate, 29% in equities, 22% in fixed income and 4% in cash.
SPF’s excellent performance in recent times has not been easily achievable given SPF’s vulnerability to external factors. This is a great achievement for a very testing year of 2020 with the impact of Covid-19 on the economy and on a global scale, forcing businesses both in Seychelles and around the world, to change their ways of thinking and doing business. SPF too has veered its focus to business continuity, strategising on the go, and building a robust risk management system, proactively putting in place required controls and ‘new normal’ ways of operating.
1) Amendments to the SPF Act and Regulations 2005
Since its enactment in 2005, the SPF Act and Regulations have continuously been amended to align with developments and best practices. To date the SPF Act has been amended 4 times, the SPF (Benefits) Regulations 14 times and the SPF (Membership and Contributions) Regulations 6 times. This portrays SPF’s objective of evolving the pension system for the benefit of its members and beneficiaries.
In regards to the latest amendments, as of January 1, 2019, the amendment of the SPF Act entered into force with a focus on the development of pension. This was mainly through introduction of:
- benefit for the terminally ill to access funds in their account, if they qualify for pension
- dependent with severe disability to be provided a pension and
- flexible retirement from the age of 60 years old
In 2019, the Act was amended to amend threshold of investment and disposal of asset requiring Minister responsible for Finance’s approval.
In 2020, the SPF (Benefits) Regulations were amended to introduce and increase minimum pension, allow for back pay of pension upon application within a year of eligibility and clarified the definition of ‘retirement from work’.
2) Meeting Investment Strategy Targets
With the introduction of its investment policy in September 2018 and its Investment strategy, approved by the Board in October 2018, SPF has set its targeted investment returns, asset mix, target and benchmarks which are expected over the short, medium and long term. These have been achieved over the recent years, equities increased from 4% in 2015 to 29% in 2020, real estate from 56% in 2015 to 46% in 2020, and Fixed Income from 17% in 2015 to 20% in 2020.
SPF has also increased in international investments through investments in Exchange Traded Fund (ETF), Afreximbank and Trade Development Bank (TDB). In terms of Geographical allocation, 9% of the investment portfolio is internal investments at approximately R301 million.
SPF has diversified its investments in different sectors of the economy including telecommunication, fisheries, residential, insurance, commercial, carpark. Over 23% of SPF investments are in Environmental, Social and Governance (ESG) investments such as housing, micro-enterprises, office accommodation, infrastructure development, and gym.
3) Procurement of key strategic properties for development and current capital projects
SPF currently owns 24 properties of which 18 are generating income. The ongoing capital projects for SPF in 2020 was Ile Du Port Micro Enterprise Project, Commercial Building on Independence Avenue (Pirates Arms Re-Development Project), Le Chantier Mall improvements on 3rd and 7th Floor and Pointe Au Sel Housing Projects.
4) Good practice award
Seychelles Pension Fund personified success with a string of prizes and special mentions with regard to its participation in international awards organised by social security governing bodies notably the International Social Security Association (ISSA) and the Pensions & Investments World Pension Summit Innovation Awards. These awards are aimed at challenging innovation, good practices and the sharing of good practices within the International Social Security organisations, which SPF is a member organisation.
Over the latter part of the past 15 years, SPF has known no ends to its innovative measures aimed at improving its members’ experience. In 2018, SPF introduced its Pension Calculator – an online technology available on SPF’s website www.pensionfund.sc replicated offline through its pension calculator wheel which received acclaims from ISSA. The annually reproduced pension calculator wheel is a handy guide for retiring members to get an indicative approximation of the pension they are due. It is based on their salary and total number of years contributed to the Fund – an idea worthy of a Certificate of Merit for ISSA good practice for Africa.
In 2020, SPF again participated in the bi-annual competition with a list of new innovative ideas undertaken during 2019-2020.
Its Voluntary contribution starter gift voucher concept earned SPF as a Nominated finalist for the annual Pensions & Investments World Pension Summit Innovation Awards 2020 as well as special mention for Certificate of Merit for ISSA good practice for Africa.The concept’s objective was to identify ways in which existing contributors or retirees can influence significant others and loved ones through advocacy to consider saving through the voluntary contribution scheme by targeting gifting as consumer behaviour trait. The Christmas Voluntary contribution starter pack launched in December 2018 kicked off the campaign, which was a significant success. It was followed by the Valentine’s Day, Mothers’ Day and Women’s Day Voluntary contribution starter pack in 2019. Gift bearers makes a one-off contribution to the member’s account by completing the voucher which is then presented to the member with a voluntary contribution form attached for completion by means of monthly salary deduction by the member. The concept has had a snowball effect as members has started identifying their own occasions to dedicate a Voluntary Contribution starter gift voucher e.g birthdays.
Other ideas submitted were awarded with special mentions.
- Certificates of Merit
- Educational cartoon strips in national media: to promote correct information sourcing for members reaching out for pension education
- Extended Mark-up Language Files: implementation of an automatic data capture to allow for timely posting of allocations and reduce human error
- Pension e-service: enable members to register and obtain access to their statement of account online at any given time.
- Pension in figures: A pocket-sized booklet to reach out to the members, be more transparent and promote easy access and a more practical way of keeping them self-aware of the SPF’s financial and operational health.
Attestation
- Protecting you: Informal sector campaign; Engage effectively with workers in the informal sector by targeting individual groups independently.
5) Digitalisation of SPF processes
2020 has also seen the transition of SPF with more automated services, digitalised records and customer friendly online e-services, such as e-contributions, e-statements and e-registrations.
- My pension E-service
- E-contribution
- Digitalised records
6) Policy development
A total of 27 policies are in place at SPF with 15 new introduced in 2020 and 6 reviews/amendments made. The new policies range from Whistle-blowing policy to Occupational Health and Safety policy and Debtors Management policy, all helping with SPF in enhancing its good governance practices.
7) Staff development
In addition to customary training for all of SPF’s staff, both through TGMI and in-house, capacity building was also extended to the institution, through a Reserves Advisory Management Partnership with the World Bank, where SPF was able to further bolster capacity within the context of its investment management practices. In addition, through International Social Security Association programme, SPF also trained 100% of its staff from its core business of pension administration.
8) Stakeholder engagement
SPF constantly engages with its members and the public in general through educational and aggressive marketing programmes. The 1st Annual General Meeting (AGM) was held in 2016 and the latest in 2019 with the aim of providing information and giving members a platform to bring forth ideas and views for consideration.
Ending 2020 on a high
Seychelles Pension Fund has consistently grown from strength to strength in a bid to improve its financial performance vital to its ability to fund members’ pension now and in the long run. The pre-audited results of a rather challenging 2020 indicates that SPF’s total income for the year has been the highest and so has been its pension payments, but despite that, SPF has exceeded its forecasted surplus for the year and have made a surplus of R155 million. SPF has also surpassed the budget in other areas too like in voluntary contributions, collecting R36 million, 22% above 2019 achievement. This is coupled by an impressive and incredible investment return of 11% for the year, which is an all-time high for SPF, mainly because of currency hedging.
Contributed by SPF
