Avia Collinder, Business Writer
Audrey Deer-Williams, director of investments for the National Investment Fund (NIF), said the fund had a good year in 2012 and is "very confident" of another successful run in the coming period.
Deer-Williams said the fund will be making new investments in the next fiscal year, which starts in April. The projects are pending approval.
NIF manages and invests National Insurance Scheme (NIS) contributions, which currently amount to about J$12 billion per annum, but nets out at more than J$9 billion after administrative and other charges.
Contributions are paid directly to an account managed by the NIF.
"When the NIS needs money to pay benefits we pass over the funds," Deer-Williams said.
Annual NIS contributions have been lagging payouts to beneficiaries - the gap is currently about J$3 billion per annum, says Deer-Williams.
Changes to social security policy took effect January 7 to increase the size of contributions by: lifting the wage cap from J$1m to J$1.5m cap from persons earning a more than a million dollars; and doubling the contribution rate among low-wage workers, voluntary contributors and self-employed from J$50 to J$100 per week.
Positioned for good year
The changes will bring in an additional J$1.4 billion, but the new funds will be swiftly gobbled up by the expected J$1.5 billion increase in pension payouts resulting from a 16.66 per cent increase in benefits now being implemented.
Deer-Williams said the NIF, working with its actuaries, is positioned to deliver another good year of returns and to cover pension payments.
The NIF grew its fund assets by J$928 million in the first 11 months to J$71.24b.
"It is anticipated that growth will come as a result of several new investment undertakings in the coming period and, consequently, the fund will be fully able to satisfy its pension obligations as they become due," the fund manager told the Financial Gleaner.
Three quarters of the fund is held in Government of Jamaica securities, but the NIF plans to reduce those holdings.
"Our objective is to reduce the level of GOJ paper. We are currently at 76 per cent," she said, without elaborating on targets.
The NIF is also in the process of disposing of several resort property holdings, but Deer-Williams said the value of the properties is not reflected in the fund and, as such, the disposals would have no adverse impact on the value of the fund.
They "are not consolidated and so are not reflected in returns. We actually have more assets than reported therefore," she said.
Only Breezes Montego Bay remains for sale. The property is at the centre of a legal dispute between NIF and its former operator. The case was referred to mediation.
The NIF in December began reviewing new bids for its Braco resort property in Trelawny.
Investment income up to November 2012 amounted to J$4.95b, up J$228m year-on-year, while dividend income almost doubled to J$401 million, and property income climbed by a third to J$177m.
On a fiscal year basis, April to November 2012, total investment income amounted to J$3.7 billion, representing an increase of J$334 million, Deer-Williams said.