Jamaican private pensions resilient says FSC as funds value exceed $782 billion

 

 


Pensions regulator the Financial Services Commission (FSC) reports that as at September 30, 2024, the total value of assets invested in the Jamaican private pensions industry was $782.41 billion, representing a quarter-over-quarter increase of 2.22 per cent.

This represents the first uptick in the positive growth rate since the 2.95 per cent December 2023 increase. The 2.22 per cent growth for this quarter can be attributed to the 651 pension plans that reported growth in assets ranging from slightly above 0.05 per cent to 42.80 per cnet, reflecting 89 more plans than the previous quarter.

The number of solvent active pension plans increased by two over the quarter from 336 to 338. Overall, the Jamaican pension industry was fairly resilient despite local and global economic challenges and geopolitical tensions, the FSC states, also asserting that amidst a decreasing interest rate environment and projected decline in real economic output, growth potential is expected to increase over the medium term.



For the September 2024 quarter, of the 819 pension plans, 741 held assets. Of that amount, 651 or 87.85 per cent reported a quarterly asset increase, 79 or 10.66 per cent had a quarterly asset decrease, and 11 terminating plans (1.48 per cent of plans) reported no movement in assets

The increase in the growth rate from 0.97 per cent in June 2024, to 2.19 per cent





in September 2024 was driven by an increase in the growth of investment asset values for the top three asset classes, repurchase agreements, and deposits when compared to the previous quarter. Since March 2015, Investment Arrangements, Securities of Governments, and Stocks and Shares have been the top three investment classes for the pension industry and have all reported marginal to moderate growth.

The FSC commented, “For deposits, its growth during the September 2024 quarter greatly improved to 17.54% when compared to the last quarter-over-quarter increase of 2.49 per cent. This may be indicative of combination of higher potential returns from heightened interest rates, liquidity needs for upcoming retirements, and limited alternative investment opportunities.”

It is the regulators opinion that elevated interest rates within the economy during the period continued to hinder pension plan asset growth as the impact of the 25-basis point reduction on August 20, 2024, had lag effects on the overall economy.

This is further represented in the anemic performance of the major indices of the Jamaican stock market except for the JSE All Jamaican Index.



Caribbean Money Daily

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