Jamaican Pensions see deposit surge

 

 



Caribbean Money Daily

Elevated interest rates in Jamaica are being blamed by sector supervisor the Financial Services Commission (FSC) for continued slow growth in the pensions sector, but asset values are nevertheless being fueled by relatively high deposit levels.



It was stated in the FSC’s March 2024 report - the most recent one available - that “The elevated interest rate environment within the economy remains continues to stymie the growth in asset prices within the pension portfolio. This is evidenced in the anemic performance of the Jamaica stock market.”



However, as at March , the total value of assets invested in the Jamaican private pensions industry was $758.02 billion, representing a quarter over quarter increase of 1.64 per cent. This compares to asset totals of to $707.56 billion as at March 2023.



During the March 2024 quarter, all asset classes but repurchase agreements
increased in value. Deposits within the aggregate pension portfolio increased
by double digits during the quarter which is indicative of increased liquidity but also lower potential investment returns, the regulator stated.

Payments from members were the best performing asset class growing 14.49 percent in 2024 Q1 to $15.19 billion compared to December 2023 quarter when deposit balances were $13.27 billion.

In second place was commercial paper which grew 7.96 per cent to
$252.49 million as at March 2024 compared to $233.88 million in December 2023.

Mortgage loans meanwhile grew 5 per cent in 2024 Q1 to $34.98 million compared to $33.32 million in the December 2023 quarter.

Repurchase agreements, however, declined -6.45 per cent in March 2024 quarter to $24.19 billion, this compared to balances of $25.86B in December 2023 final quarter.

The FSC commented, “During the March 2024 quarter, all asset classes but repurchase agreements increased in value. Deposits within the aggregate pension portfolio increased by approximately 15 per cent during the quarter which is indicative of increased liquidity but also lower potential investment returns.”

The FSC concluded that overall, the industry has managed to maintain an upward trend in asset growth from the past year.

It was noted that “Growth for this quarter can be attributed to the 666 pension plans that
reported growth in assets ranging from 0.05 per cent to 37.39 per cent, reflecting
89 more plans than the previous quarter.

The FSC said that the number of solvent active pension plans remained the same during the March 2024 quarter. The regulator concluded however that there were more plans reporting higher solvency 
positions over the last inter-valuation period.

-Caribbean Money Daily

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