KZNMPF LATEST UPDATE
INVESTMENT UPDATE
Commentary
It is hard to believe that we have now passed the 1-year anniversary of our first Covid lockdown and by now we have all found a way to adapt to our new environment. We have weathered both the first and second waves of infection and brace ourselves for the potential third wave.
As lockdowns have become less severe and our economy has opened up, we have seen a recovery in our local markets, following the trend seen around the World. The present focus is on the effectiveness of vaccine roll out in South Africa and globally. The sooner vaccinations have been received by the majority of the population, the sooner we are likely to return back to “normal”.
In response to the pandemic, many countries (including South Africa) reduced interest rates and announced and implemented stimulus packages aimed at rescuing businesses from bankruptcy during the lockdowns and aimed at alleviating the financial difficulties experienced by individuals who may have lost their jobs or had their income reduced. Most recently, the Unlisted States announced a further almost USD2 trillion stimulus package.
These stimulus packages and the development of various Covid vaccines has helped global investment markets to stabalise and stage a very strong recovery after the market crash in February/ March 2020. The conclusion of the US election at the end of 2020 (although marred by the Capitol riot and controversy) and the signing of a Brexit Deal has also helped improve market sentiment globally. As an Emerging Market, South Africa has benefited from this improvement in World-wide sentiment and should continue to benefit for as long as global interest rates remain low and vaccine roll outs are successful globally.
As you will see from the table and graph below, our Fund has benefited greatly from this recovery. Having started 2020 with around R15 billion in assets, the Fund had roughly R18 billion as at the end of March 2021.
Fund Returns
After the crash in quarter 1 of 2020 – we saw a very strong recovery in quarter 2 of 2020, followed by a quarter of consolidation. 2020 ended the year on a very positive and this has continued into 2021, for the reasons highlighted above.
The growth portfolios (Aggressive, Managed, Islamic and Global Balanced) have delivered a return of over 35%! The Defensive and Moderate portfolios have delivered a very pleasing 21% and 29%, respectively.
This means that Quarter 2 of 2020 will be one of the Fund’s best quarters in many years, unless we see losses in the last few days of June 2020.
As a result, the Fund’s returns over the last 12 months to 31 March 2021 has been one of the best 12 months in the Fund’s 20-year history!
This again highlights the importance of remaining invested in line with the long-term investment strategy. The table below shows the various Fund portfolio returns over different periods ending on 31 March 2021.
You can see the strong returns that have come through in the last 3 and 6 months which have resulted in the 1-year return being a phenomenal 35% to 38% for the growth portfolios. The returns are so high as the 1 year return now excludes the market crash of February/ March 2020 and only shows the recovery.
This means that when you receive your next investment statement it is likely to show a big increase in your retirement savings. After a great year, the 3-year returns are now starting to look a bit better at around inflation + 4% per annum. The 5-year returns remain subdued as a result of the low returns earned by South African growth assets (shares and listed property) over the period.
Value of Assets
As mentioned above, the Fund’s assets have growth substantially over the last year. The graph below shows how the Fund’s assets dropped from R15 billion to around R13 billion, through the market crash of 2020, and then how the assets have grown quarter after quarter to reach its highest level ever: R18 billion!
The investment portfolios remain well positioned to continue to benefit from the recovery in local and global economies as the world deals with the financial impact of Covid-19 on world growth. The Fund remains committed to its long-term investment strategy for the long term benefit of all members! Together we grow your wealth!
NEW HOMELOAN PROVIDER
Trustees are happy to present Ithala Bank as the second homeloan provider, members have started getting loans from this new homeloan provider. Our members now have an option to choose from when applying for the Homeloan, between Standard Bank and Ithala Bank. Members can get more information on the homeloan application process at the Front Office, by colling 031 322 9001 or via e-mail: statements@kznmpf.org or by visiting the Fund offices at 5 Walnut Road, Ground Floor Smart Exchange Building, Durban.
NEW INFUND BENEFIT COUNSELLORS
The Fund has signed a three-year contract with Optimate Financial Solutions for the advisory services to those members about to or considering exiting the Fund, either through retirement, resignation, or dismissal from the Fund. Interested members are requested to contact the Front Office on the contact details above.
FUND PORTAL
One other interesting development is the Fund Portal which provides detailed information on various Fund matters. Members are requested to use a few of their time to interact with the portal for further understanding of the Fund matters.
WEBSITE REVAMP
Members are invited to visit the new look website on www.kznmpf.org where the Portal is housed among other interesting things. Our website is fresh and vibrant and is packed with more information with an opportunity to directly communicate with the Fund if necessary.
DEFEATING THE COVID-19 SCOURGE
Year 2020 saw the Covid-19 infecting a lot of members and killing higher numbers in the council, the Front Office also saw a few staff members infected as well with great recoveries into January 2021. Despite the notable challenges the office remained open for member walk-ins throughout the deadly 501Y.V2 Covid-19 variant. Though we have not won the war against the Covid-19 scourge, but we are winning battle by battle each day. By following all the Covid-19 regulations we will avoid the spread of much feared third variant.
MYTH BUSTERS
The Fund wish to clear matters that have been widely discussed and recently queried by members.
Will government take members’ Funds by force?
No, the government has expressed no sign of dissatisfaction with how the Fund is run and no desire to taking over the Fund. We are therefore happy to announce that the Fund is very stable plus all assets are in the Fund’s name. The Fund Trustees are the sole custodians of the Fund’s assets on behalf of the entire membership and employer(s).
Using the accumulated Fund savings for individual members’ loan consolidation.
There was a discussion paper released by parliament regarding the regulators granting access to pension investors retirement savings for purposes of debt consolidation. This was in line with the Covid-19 decrease of income circulation leaving a lot of people struggling financially. There have been no reported updates after the release of the discussion paper noted above.
KZN does not payout to your surviving family members after the death of both member and spouse.
The Fund Trustees distribute late member benefits in accordance with section 37C of the, which prioritize dependents irrespective of age. Because the act is silent on how old the dependents ought to be to qualify, we then pay to all dependents of the deceased member no matter how old they are. We therefore wish to dismiss rumours that KZN Municipal Pension Fund does not pay major dependents as not true.
You are welcome to contact the Fund Front Office if you have any queries regarding the Fund and your benefits.
KZN MUNICIPAL PENSION FUND
MAY 2021