The role of occupational pension
            funds in Mauritius
Mauritius belongs to a select group of
            developing countries where contractual savings-savings with
            insurance companies and pension funds-exceed 40 percent of
            GDP and represent a major potential force in the local
            financial system. Pension funds account for 75 percent of
            contractual savings. Contractual savings institutions invest
            in government securities, housing loans, corporate
            securities, real estate and bank deposits. They currently
            hold 35 percent of government securities and also account
            for 36 percent of total outstanding housing loans.Given
            their strong demand for long-duration assets, they can
            stimulate the issue of long-term government bonds (both
            inflation-linked and zero-coupon) and the development of
            corporate debentures, mortgage bonds, and mortgage-backed
            securities.Mauritius has a balanced and well-managed
            multipillar pension system. In addition to several public
            components, such as the Basic Retirement Pension, the
            National Pensions Fund (NPF), the National Savings Fund, and
            the Civil Service Pension Scheme, there are over 1,000
            funded occupational pension schemes that play an
            increasingly important part in the whole system. The funded
            schemes are divided into two main groups-those insured
            and/or administered by insurance companies, and those that
            are self-administered and are registered with the Registrar
            of Associations. Coverage of the funded schemes is estimated
            at about 10 percent of the labor force. Together with the
            unfunded civil service scheme, occupational pension schemes
            cover about 100,000 employees or 20 percent of the labor
            force. All types of pension funds, including the public
            ones, report low operating costs. This reflects the absence
            of marketing and selling costs and, in the case of large
            private pension funds, the assumption of some costs by
            sponsoring employers. The investment performance of the
            self-administered funds was less than fully satisfactory in
            the late 1990s, reflecting poor returns on the local and
            foreign equity markets. Funds insured or administered by
            insurance companies as well the NPF performed better during
            this period because of their heavier allocations in
            government securities and housing loans. However, over a
            longer period, the private pension funds probably
            outperformed the NPF. The regulatory framework, though
            fragmented, is not unreasonable. It has many important
            provisions, such as observance of internationally acceptable
            accounting and actuarial standards and minimum vesting and
            portability rules, and it does not impose prescribed limits
            on investments. However, consolidation and modernization of
            the regulatory framework is required, while supervision,
            which is currently nonexistent, needs to be developed and to
            be proactive.