Old Mutual Declares 11% Bonus Guarantee Fund
Old Mutual has declared an 11 percent Bonus Guarantee Fund in an attempt to cushion customers from economic hardships orchestrated by COVID-19 in 2020.
Managing Director for Old Mutual Malawi Limited, Roy Punungwe, said on Tuesday evening after the declaration that “what we are doing is a simple concept.”
“All this pension funds give us their funds to invest. Essentially, we do invest these amounts in stock markets but sometimes, as you know situation in 2020, investment is not always what we want to be. You can fluctuate up and down.
“But with Guarantee Fund, with the smoothing concept, we are able to ensure that there is no volatility and more stable returns that we provide to our clients. As you know with the 2020, we declared a bonus of 11 percent even thought the fund performance was 8.2 percent.”
Punungwe, however, said there are rays of hope that business may bounce back stronger with rolling out of COVID-19 vaccine.
“It is a bit tough right now to see the big shift. We are still in the midst of the pandemic. A lot will depend on how successful the vaccine roll out will be.
“But I think anyone who invested in the Guaranteed Fund, there is enough reserve that even if we have a repeat this year, we will still be able to offer inflation between the terms in terms of the bonus declaration,” he said.
The MD added that the pandemic has as well affected pension remittance by many companies.
“We have some employers struggling to remit the contributions whether employee or employer contributions. This issue has been in the industry for a very long time.
“We are trying to find lasting solutions to ensure that these funds are invested well in time so that they earn the interest they deserve to earn,” said Punungwe.