As it prepares for the next stage of growth in reaching one million customers by 2025, the VM (Victoria Mutual) Group is planning on deepening the pension market through its branch network and the offering of investment offerings to various entities across the region.

According to the Financial Services Commission June report, 139,419 individuals are members of an approved retirement scheme (ARS) with 119,547 being in a defined contribution scheme with the remainder in a defined benefit scheme. This means that only 11.47 per cent of the population is contributing to a pension scheme of the 1,215,000 employed labour force at the end of July. Only 47 per cent of the employed labour force contributes to the National Insurance Scheme (NIS). This means that most of the population has no social security or pension net available to them around the standard retirement years of 60– 65.

The private pension market peaked at $700.7 billion in assets at the end of 2019 before the novel coronavirus pandemic decimated most of the pension fund returns in 2020. Pension fund assets have grown from $663.07 billion since the start of 2021 to $686.96 billion at the end of June. The Government launched a $800-million social pension programme for vulnerable persons over 75 who don’t reside in a government facility, receive no pension nor any other benefits. This was proceeded by the Ministry of Tourism accepting persons into the Tourism Workers’ Pension scheme which was seeded with $1 billion.

VM Pension Management (VMPM) is the pension fund management arm of the VM Group and had $52.99 billion in funds under management at the end of 2020. With the group undergoing a restructuring, VMPM will be offering its services through the 16 VMBS branches across the island in its effort to bring more persons under its ARS offering.

“VM Pensions was only sold through the office that’s on this building [head office]. Only 11 per cent of our working population has a pension plan which is a huge problem as we’re living longer. If we’re living longer, it means that the retirement years are longer. If you haven’t properly provided for yourself in those times, then you’re going to be depending on your children and church brothers and sisters for help. We’re trying to reach those who are self-employed, the professionals and so on. We’re using the ARS as the vehicle for serving those clients,” stated President and Chief Executive Officer (CEO) of the VM Group Courtney Campbell on Monday.

Subsidiaries within the VM Group have been expanding their presence in the group through the existing VMBS branch network. VM Wealth Management Limited opened six new locations across the island as part of its move to expand its client base and have a larger market presence.

“If we can increase our touchpoint via electronic or branch, we want to be able to get out to a number of organisational groups. We want taxi operators and other important sector workers to have pensions. We want to work very closely with them so that they can understand pensions,” stated CEO of VMPM Conroy Rose.

Rose further reiterated, “For the VM Group, it’s more than just a job, but more like a mandate and part of our strategic objectives to transform lives. We really want to try and help with this problem. A lot of persons just don’t know about pensions. Some people believe pensions is insurance or only the NIS. We’re making the language very simple and building the trust.”

The Bank of Jamaica (BOJ) amended the foreign exchange limit for pensions funds last year from five to 10 per cent over two phases which saw it increase by 2.5 per cent in November 2020 and April. This move by the BOJ has been coupled by the increase in pension fund participation in the equity market and alternative investment vehicles. An example of this is in the case of Kingston Properties Limited where pension funds in the top 10 shareholder list control 45.16 per cent of the issued share capital.

There has been further diversification in the market with the Sygnus Group creating different alternative investment vehicles for pension funds and other investors to use in seeking better returns. Pension funds make up a large portion of Sygnus Credit Investments Limited and Sygnus Real Estate Finance Limited’s largest investors. Sygnus Deneb Investments Limited remains private, but the principals of Sygnus have indicated that pension funds are large investors in the outfit. Barita Investments Limited has allocated $4 billion from its $10.78 billion additional public offering to alternative investments.

When questioned about how the VMPM would grow its pension reach and find assets to invest in, Group Chief Investment Officer Devon Barrett explained that this would be done through the creation of new investment products and offerings resulting from the VM Group’s restructuring and expansion in the Caribbean. VMBS is currently limited to only offering deferred shares if it wanted to raise additional capital from the Jamaica Stock Exchange. VM Investments Limited is the only publicly listed part of the VM Group.

“What has happened with the pension funds and asset classes on a whole is that they’ve tended to go directly to listed entities or established bodies. What’s emerged is that there is a shift from direct bank borrowing to the point where SME’s are coming to the capital market to raise funding. What that does is to create other asset classes for investments like pension funds. When we have these new structures, pension funds can buy into these structures and these returns would go straight to the pension fund participants. All pension fund members need to pay attention to the returns that are being generated and credited to the pension fund.”