In a bid to cushion members from high-risks, Botswana Public Officers Pension Fund (BPOPF) plan to introduce a moderate growth portfolio.
The low-risk product, which will look to make slight gains when markets are performing well, has already been approved at board level, with its roll out targeted for October 2023.
Updating the media on Thursday, BPOPF Chief Investment Officer, Tshephang Loeto explained this was part of the fund’s strategy to develop value enhancing products for members.
“The moderate growth portfolio was created to allow members to reduce risk as they near retirement while also maintaining good returns. This portfolio is suitable for members wanting to move out of the aggressive portfolio but still want more potential growth from their investments than is offered by the pre-retirement switch portfolio,” he said.
The portfolio is less aggressive than the active and deferred member portfolios and less conservative than the pre-retirement switch.
As a result, the new product is eligible to those members who are 40 and above and switch is allowed only once annually.
“Switching from active to the moderate growth portfolio is optional but switching back to the active portfolio is not allowed. Members are eligible to opt into the Moderate Growth portfolio five years before their planned retirement date. Further, if you selected to switch to this portfolio, you are still eligible in the coming years to further reduce risks and opt to be switched into the pre-retirement portfolio,” continued Loeto.
Meanwhile, the Retirement Funds Act of 2022, which came into effect in October, has brought key changes to the pension funds sector.
Members will no be assisted with 100 percent of the loan if they have defaults as well as in mortgages while medical expenses for terminal ailments will be 50 percent of the pension.
Active members are now entitled to P25, 000 or 25 percent of the pension upon resignation and transfer from one fund to another. Previously this figure was capped at P5, 000 or 25 percent.
In regards to retrenchment or dismissal, members can now get P25, 000 or 33.3 percent of the pension, an upgrade from P5, 000 in the old act.
According to Chief Legal Officer, Kwenantle Otukile, while the new act provides for early withdrawal and use of benefits under certain circumstances, it has to be approved by the board first.
“There should be proof that the deferred member has been consecutively employed for at least six months and most importantly demonstrate that the use of their pension benefits is the last resort, that is there is no other assets to settle the mortgage or loan or medical bills for terminal illness. Further where a deferred member happens to belong to more than one fund, only one fund shall make the payment for the loan,” she explained.
BPOPF is the largest pension fund in Botswana by far with assets under management sitting at P90 billion as of March. Underpinned by over 140, 000 civil servants, the fund saw a decline over the past months, and by October was down to a ‘paltry’ P87 billion