Pension fund in actuarial deficit

Pension fund in actuarial deficit
Published: 18 November 2013
The Local Authorities Pension Fund (LAPF) ability to meet its pension obligations is in doubt as the institution is facing a $341,4 million actuarial deficit as at the end of December 2012.

The LAPF is made up of members from 47 institutions whose membership is compulsory for all permanent local authority employees who have not attained the age of 55 years.

An actuarial deficit refers to the difference between a fund's future social security obligations and its income at present. While the LAPF recorded a 4,14 percent growth in income to $32,9 million in 2012 compared to the previous year, a study by Quantum Consultants and Actuaries (QCA) early this year revealed that the fund was insolvent.

At the end of December 2012, the fund's actuarial asset value amounted to $170,6 million while actuarial liabilities stood at $512 million, leaving it with a $341,4 million deficit. QCA, however, said the values of assets and liabilities were based on estimates.

"The actual financial position can only be determined once a full actuarial valuation has been conducted," it said.

LAPF chairman Mr Misheck Mubvumbi said sponsors of the scheme must inject at least $110,2 million into the fund over the next three years for it to attain minimum solvency.

"Due to constrained financial capacity of member local authorities, the likelihood of the minimum solvency deficit being amortised as recommended by the fund actuary in the near term is remote," Mr Mubvumbi said in a statement accompanying LAPF's annual report.


- New Ziana
Tags: Pension,

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