PSPF SURPLUS SHOWS FAVOURABLE VARIANCE OF 74%

MBABANE - The Public Service Pensions Fund’s (PSPF) financial performance in the first quarter of the year declined compared to the third quarter ended December 31, 2023.According to the Ministry of Public Works and Transport quarterly report, the fund recorded a net surplus of E743.1 million in the period under review, up from a net surplus of E1.388 million recorded in December 2023.However, the year-to-date surplus stands at E2. 897 million, with a favourable variance of 74 per cent to the year-to-date budget. This significant increase in performance was a result of a resurgence in global equity markets due to stagnation in inflation. This improved prices in equities, resulting in higher revaluation gains in the period under review.A favourable variance occurs when the cost of producing something is less than the budgeted cost. It means a business is making more profit than originally anticipated. Favourable variances could be the result of increased efficiencies in manufacturing, cheaper material costs, or increased sales.

Dividends

The fund’s investment income in the year was E1.921 million, which resulted in an adverse variance of 10 per cent to the year-to-date budget of E2.128 million. The investment income consists of interest income and dividends from the foreign and domestic portfolios in the period under review.This was mainly attributed to the decrease in interest income, realised profits and returns received from the South African and domestic-based portfolios, which was a result of poor performance in equities in the first two quarters of the financial year 2024.
The revaluation gains recognised were E1.566 million in the financial year, which is above the gain recorded in the full-year budget of E632 million. This was mainly attributed to the highest gains acquired in November 2023, due to a resurgence in the global equity markets, improving equity prices.However, global economic growth has seen some positive developments, which, on balance, caused recent global growth forecasts to be revised, despite risks, and the International Monetary Fund (IMF) shows no dip in growth from 2023, with a 3.1 per cent outcome expected from both.

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