Provident funds essential for COVID-19 survival, recovery

Superannuation and provident funds in the region have proven essential during the COVID-19 pandemic, a new survey has found.

The World Bank’s International Finance Corporation (I.F.C.) and the Pacific Islands Investment Forum (P.I.I.F.), of which Samoa is a member, surveyed the region and found their provident funds can provide essential social protection that complement Government financial support.

In a statement, Samoa National Provident Fund Chief Executive Officer, Pauli Prince Suhren, who is also Chair of P.I.I.F., said the funds helped people “weather the economic crisis” of COVID-19.

“They will now be key players in the resilient recovery of our region, with prudent and flexible approaches to investing to create better returns for the many people across the Pacific who are their members.”

With that in mind, long-term investment will continue to be the focus, including cross border investment opportunities across the Pacific.

This will be especially important for spending on infrastructure, with an estimated US$45 billion needed over the next 12 years.

 The International Finance Corporation, which focuses on the private sector in emerging markets, is working with the P.I.I.F. through the Pacific Partnership, which includes the Governments of Australia and New Zealand.

They work to stimulate the private sector and hope to reduce poverty through the power of the market, investing US$22 billion in private companies and financial institutions in developing countries in 2020 alone.

Country manager for Australia, New Zealand, and the Pacific Thomas Jacobs said infrastructure investment opportunities in the region are enormous.

“Investing in infrastructure can generate good returns while also delivering broader economic and development benefits,” he said.

“Pacific funds are in a good position to partner with government and the private sector as we look towards recovery and building back better.”

P.I.I.F hosted its second-ever forum in Samoa last September, bringing together the C.E.O.s of the entire region’s superannuation or provident funds. 

During that meeting, the 17 members agreed to start looking at co-investments on infrastructure developments in the region and spend its collective US$8.87 billion worth of assets on their people’s betterment. 

I.F.C senior financial sector specialist Aaron Levine said by themselves, all the pension funds are too small to work alone.

“They, especially the small countries, reached their limits in with what they can invest in domestically and many felt if they could access regional investment opportunities they could better serve their people because they could bring in capital, money, to invest in projects that would benefit their people,” he told the Samoa Observer in 2019 .

“But here in the Pacific with such a dominant role and having so much capital available and so many infrastructure needs, they are inevitably going to play a broader role than just returning funds to their investors.”

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