MEMBERS CONSUME SAVINGS BEFORE RETIREMENT - ENPF CEO

MBABANE – Savings are meant for rainy days. The Eswatini National Provident Fund (ENPF) has noted with concern that it would not be the case for some of its members.

ENPF Chief Executive Officer Prince Lonkhokhela said the total value of benefits paid out by the fund for the 2016/17 financial year was E123 million compared to E121 million dispersed in 2016.

“Of this, E81 million went to age benefit and only E26 million was claimed for retirement.
“We find this worrying as it sends a message that most of our members will reach retirement age having long consumed their savings,” the CEO said.

Reflection

However, the prince expressed hope that the passing of the Bill converting the Provident Fund into a Pension Fund would resolve this challenge for good.
In this regard, Prince Lonkhokhela said they pride themselves at the way they treat their customers.

He mentioned that the way they treated their customers was a reflection of their corporate values.
“Our dealings are open to customer scrutiny offering complete transparency. These are a reflection of our true values; how we strive to treat our customers,” he said.

He also noted that member interest payment and member benefit payments were improving in line with expectation.
“Conversely, we caution that employers’ compliance levels have deteriorated from 91 per cent compliance to 87 per cent.

“This can be attributed to the weak economic environment and need for participating employers to improve compliance. The fund’s compliance inspectors are focusing on employer compliance. We have been focusing on resolving such issues through negotiation rather than relying on legislative penalties,” he said.

Comparative

On another note, the prince said relative to comparative institutions, the fund had a long history of paying returns to its members that were higher than what was paid by comparative institutions.

“We have seen notably lower returns over the past two years, this has been driven by unusual global market return series and currency volatility. By any standard this has been a good interest payment to our members.

“It is notable that the last two years have been on the lower side as returns have been squeezed in line with the contraction of the South African economy,” he added. Despite the growth of the fund’s size from E300 million in 2000 to E3.3 billion in 2017,  the CEO said they had kept the head count constant in terms of employees.

 This, he said spoke to their commitment to a current and future control of all expenses and more specifically notable in administration expenses. Well before the regulator changes were promulgated stating that Eswatini retirement funds should invest a minimum of 50 per cent of their portfolios in the country, Prince Lonkhokhela said as a fund, they were invested in the country.

Investments

“At the end of the financial year under review, we invested in excess of 50 per cent of the fund’s assets in Eswatini. With our founding legislation making it compulsory for emaSwati working in Eswatini to contribute to the Eswatini National Provident Fund, we found no better way to complement members than to invest their hard earned money within Eswatini,” he elaborated.

He pointed out that they were not invested in the country just for economic returns. He said these investments created jobs, stimulated growth and contributed to a socially balanced society.

He mentioned that their investments cut across many sectors including; agriculture, leisure, technology and property, hence living their strategic intent to be a major contributor to the socio-economic growth  of the country as contained in their  vision.“While we were ahead of regulations in the level of our Eswatini investment, we also recognise the importance of diversifying our assets internationally.

There will be times when Eswatini will outperform the rest of the world and times when the rest of the world will outperform Eswatini in this regard,” he said.

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