eBusiness Weekly
Business Writer
Government is working on a Bill that will allow local pension funds to invest in offshore markets including on the Victoria Falls Stock Exchange which will trade in hard currency only, Finance and Economic Development Minister Mthuli Ncube has said.
Speaking at a Victoria Falls Stock Exchange market briefing on Wednesday, Minister Ncube said Government would want to offer support to pension funds so that they can invest in foreign securities.
“I am currently pushing a Bill through parliament that will allow pension funds to invest offshore. We would like our pension funds; we want to support them in their quest to have part of their portfolios invested in foreign securities.
“So some of those foreign securities are securities we could create ourselves as Zimbabwe on the VFEX,” Ncube said.
Pension fund managers believe investing offshore will enable them to diversify investment risk some of their portfolios are exposed to.
Offshore investments have significant potential benefits of investment returns for pension funds, especially during times when the economy is not enabling investors to generate high returns, experts say.
Currently, pension funds are only allowed to invest locally, but waivers were granted in special cases where the funds wanted to participate in rights offers by foreign firms.
In an interview early this year, Josphat Kakwere, IPEC pension director told Business Weekly that the draft Bill had a provision of permitting a portion of retirement savings invested outside the country.
“Currently, the law does not provide for offshore investment; however, the draft Pension and Provident Funds Bill has a provision of allowing pension funds to invest offshore subject to meeting certain conditions including that of prescribed assets,” he said.
The Pension and Provident Funds Amendment Bill — which seeks to induce an efficient pension system in the country; improve the welfare of pensioners, harness long term domestic savings, improve regulatory framework among others — is among the Bills expected to be presented in Parliament during the second session.
