3 months ago
23
The Financial Services Commission (FSC) is advising pension fund managers to be cautious in their investment decisions so as to safeguard the retirement savings they administer.
It comes against the backdrop of changing trade and immigration policies in the United States that the pension regulator said could impact the local economy, given the trade relationship between the two countries and Jamaica’s reliance on foreign aid for development purposes.
Jamaica’s private pension market reached a record $810.97 billion in assets under management at December 2024, marking 14 consecutive years of growth, FSC said in its newly released pension industry report.
The FSC expects that record to be extended in the near term, but is cautious in its assessment of the industry beyond that.
“Over the next year, marginal growth may be experienced in the asset value of the private pensions industry as sectoral growth prospects are impacted. However, uncertainties remain for the medium term,” the pension regulator said in its risk outlook.
Pension industry assets are primarily managed by securities dealers, which administer 55 per cent of assets under management. Life insurance companies account for nearly 37 per cent, and credit unions and other entities, 8.0 per cent.
In 2024, pension assets grew by 8.86 per cent, outpacing inflation of 4.99 per cent. The investments were concentrated in unit trusts and mutual funds at 39 per cent, stocks at 21 per cent, government securities at 20 per cent, real estate at 6.0 per cent, repurchase agreements at 4.0 per cent, and the remainder held in cash.
The number of active pension plans decreased from 359 to 357, indicating a modest contraction in the market.
Private pension coverage also experienced a slight decline from 11.79 per cent in 2023 to 11.63 per cent in 2024, reflecting faster growth in employment than pension plan participation.
While high interest rates initially slowed asset growth, Jamaica’s stock market has begun showing signs of recovery, the FSC report stated.
In its risk outlook, the regulator cautioned that policy changes by the United States are expected to impact Jamaica’s economy as the US “may roll back foreign aid programmes that play a role in supporting Jamaica’s development efforts, and change trade and immigration policies”.
Additionally, the regulator urged pension plan trustees and investment managers to continue conducting “due diligence in market monitoring and rebalancing of portfolios where necessary”.
“This proactive approach is essential for securing preservation of the value of members’ retirement income ... .” the FSC said.
English (US) ·