LATEST: FBC declares $19,6m dividend to Public Service Pension Fund

Source: LATEST: FBC declares $19,6m dividend to Public Service Pension Fund | The Chronicle

LATEST: FBC declares $19,6m dividend to Public Service Pension Fund

Business reporter

FBC Holdings on Wednesday handed the remodeled Public Service Pension Fund a $19,6 million dividend following the latter’s recent investment in the financial services group.

Last month, the Public Service Pension Fund acquired a 7,4 percent stake in the listed diversified financial services provider as part of its new investment strategy.

The move has made quick returns with the group announcing a final dividend for the year to December 31, 2020 of 44,65 cents per share to its shareholders after posting a good set of numbers for FY2020.

The group posted a profit before tax of $1,6 billion, which more than doubled from the prior comparable period.

FBC Holdings chief executive, John Mushayavanhu, said the dividend payment was in line with the group’s policy of giving good returns to investors.

“This is in line with our commitment towards promising our various investors a good return on investments. As an entity, we take great pride in our ability to issue dividends to shareholders as part of our board’s commitment to the principles of stewardship, openness, integrity and accountability,” he said.

“We value the Government’s unwavering commitment and dedication towards transforming the country’s economy to an upper-middle income status by investing in the private sector.

“Indeed, public investment in the private sector forms a major building block for boosting economic growth through promoting sustainable development of the economy’s strategic and productive sectors.”

In 2018, the Government moved to migrate from an unfunded pay-as-you-go pension arrangement to a funded defined benefit pension scheme in line with regional and international best practices.

An unfunded pension scheme is an employer-managed retirement plan that uses the employer’s current income to fund future pension payments as they become necessary.

This is in contrast to an advance funded pension scheme where an employer sets aside funds systematically and in advance to cover any pension plan expenses such as payments to retirees and their beneficiaries. The new Public Service Pension Fund was, therefore, established in January 2019. In the same year the Government allocated $70,4 million as seed money.

Public Service Commission secretary, Dr Vincent Hungwe, said the dividend payment showed that the remodeled Public Service Pension Fund was headed in the right direction.

“The payment of a dividend to any investor is one of the key indicators that makes one invest in that organisation. It should be applauded in consonance with the fact that beyond the payment of a dividend there is also evidence of growth in the value base of the institution.

“As a Public Service Pension Fund, we should be in a position to meet our obligations to pay up the liabilities as and when they are due.

“In the past the tendency was to go and draw from the National Consolidated Revenue Fund for purposes of meeting these kinds of liabilities, but that particular model, worldwide, is becoming less and less attractive and many jurisdictions are now migrating to a situation where there is upfront preparation for that liability in the future on the back of pension contributions from employees, and that is a model that we have taken on board. We would like to thank Treasury for allowing us to migrate to that model and also making the necessary support available.”

“We have also scanned the environment in a fairly detailed way for purposes of diversifying our investment portfolio in order for that portfolio to have, first, potential to have a very strong value base but at the same time also be able to generate income and build into itself the requisite resilience as we go forward.”

Just last month, the Public Service Pension Management Fund received a US$560 000 dividend from Kuvimba Mining House in respect of its shareholding in the entity.