In our discussions with the stakeholders it was felt that pension funds desirous of making use of this option should (i) prepare an investment policy, in accordance with the Central Bank’s guidelines on Prudent Person Approach to Investment and Lending which was issued in May 2005; and (ii) submit quarterly reports to the Central Bank.
The proposed approach – which is a liability-based approach – is not without its implementation problems. A major implementation challenge will be to ensure the accuracy of the liability data and consequently the calculation of the pension fund’s surplus, on an ongoing basis.