Social Security Fund of Rwanda ….Save for a better future
Social Security Fund of Rwanda (SSFR) plans to invest Frw115.5 billion over the next four years in real estate.
At least 1,620 new housing units and hostels will be constructed in different parts of the country.
Prominent among the properties to be developed is the seventeen floors Insurance Plaza in Kigali City. Those who have seen the architectural impression of the structure describe it as ‘a striking feature of the Kigali skyline’ when completed.
The fund will also build a guest house in Nyagatare, student’s hostels in Kigali, Butare and Nyagatare.
According to the breakdown, 100 residential housing units are planned to be in Rwamagana, 170 in Nyagatare, 750 at Batsinda, 600 at Kimisange and 150 at Kagugu.
Some of the developments will be undertaken in partnership with the Rwanda Housing Bank and the Development Bank.
"We think there are still opportunities in the need of modern residential
houses, students’ accommodations and working premises in the country as our economy grows," SSFR managements says.
These investments shall complement the traditional investment in the money market, debt securities, commercial mortgages, public equities, joint ventures, securities lending and offshore investments.
The investment plan is complemented by an investment policy that the SSFR Board has designed to guide in prudential investment of the Funds assets.
Besides defining eligible investments and the asset mix, the policy assigns asset class weights and the amount of discretion given to management.
"These factors are the principal determinants of risk and return. As such, investment policy plays a crucial role in determining the extent to
which benefit obligations can be offset by the Fund’s investment earnings."
"On a long-term basis, a low risk investment policy for the fund will earn low rates of return. On the other hand, a high-risk policy would be expected to provide a higher rate of return but may lead to unacceptable levels of return volatility. It is, therefore, critical that the investment policy establishes a balance between the Fund’s risk tolerance and return objectives," part of the policy reads.
The purpose of the investment policy is to establish guidelines that ensure the fund is managed within appropriate and prudent levels of risk.
In arriving at the limits for the different asset classes the management considered the financial needs of the Fund as they relate to the members and other Stakeholders; the risk tolerance of the Board; the need to maintain stable return rates and the need to maintain the liquidity of the fund.
"Because investment earnings are the Fund’s most important funding source for its day to day operations, the Board has set an Investment
Policy solely in the interests of the Fund stakeholders to ensure the Fund assets are managed effectively and efficiently in order to provide promised benefits for the Fund’s beneficiaries. Management believes
that the projected pension benefits can best be met by having the proper
long-term asset mix, including proper diversification as well as prudent management of risks."
The Board expects a real rate of return of 2 percent on all investments of the Funds money and has adopted a long-term fixed income/non fixed income asset mix policy of 50 percent in either class but gives management the
discretion to make decisions concerning the Fund’s strategic positioning within these ranges.