The Role of Occupational Pension Funds in Mauritius
Mauritius belongs to a select group of developing countries where contractual savings-savings with insurance companies and pension funds-exceed 40 percent of GDP and represent a major potential force in the local financial system. Pension funds acc...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2003/04/2329626/role-occupational-pension-funds-mauritius http://hdl.handle.net/10986/18271 |
| Summary: | Mauritius belongs to a select group of
developing countries where contractual savings-savings with
insurance companies and pension funds-exceed 40 percent of
GDP and represent a major potential force in the local
financial system. Pension funds account for 75 percent of
contractual savings. Contractual savings institutions invest
in government securities, housing loans, corporate
securities, real estate and bank deposits. They currently
hold 35 percent of government securities and also account
for 36 percent of total outstanding housing loans.Given
their strong demand for long-duration assets, they can
stimulate the issue of long-term government bonds (both
inflation-linked and zero-coupon) and the development of
corporate debentures, mortgage bonds, and mortgage-backed
securities.Mauritius has a balanced and well-managed
multipillar pension system. In addition to several public
components, such as the Basic Retirement Pension, the
National Pensions Fund (NPF), the National Savings Fund, and
the Civil Service Pension Scheme, there are over 1,000
funded occupational pension schemes that play an
increasingly important part in the whole system. The funded
schemes are divided into two main groups-those insured
and/or administered by insurance companies, and those that
are self-administered and are registered with the Registrar
of Associations. Coverage of the funded schemes is estimated
at about 10 percent of the labor force. Together with the
unfunded civil service scheme, occupational pension schemes
cover about 100,000 employees or 20 percent of the labor
force. All types of pension funds, including the public
ones, report low operating costs. This reflects the absence
of marketing and selling costs and, in the case of large
private pension funds, the assumption of some costs by
sponsoring employers. The investment performance of the
self-administered funds was less than fully satisfactory in
the late 1990s, reflecting poor returns on the local and
foreign equity markets. Funds insured or administered by
insurance companies as well the NPF performed better during
this period because of their heavier allocations in
government securities and housing loans. However, over a
longer period, the private pension funds probably
outperformed the NPF. The regulatory framework, though
fragmented, is not unreasonable. It has many important
provisions, such as observance of internationally acceptable
accounting and actuarial standards and minimum vesting and
portability rules, and it does not impose prescribed limits
on investments. However, consolidation and modernization of
the regulatory framework is required, while supervision,
which is currently nonexistent, needs to be developed and to
be proactive. |
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