The Zimbabwe Independent

Pension funds should be considerat­e

NINE years ago, a nine-member board was set up to address the plight of pensioners who lost their savings during Zimbabwe's pre2009 hyperinfla­tionary collapse. The Justice George Smith Commission, appointed by former president Robert Mugabe, was tasked with investigat­ing the conversion of insurance and pension values from Zimbabwean dollars to United States dollars, establish the extend of prejudice and recommend compensati­on, among other mandates.

In its 2017 report, the commission attributed the loss of value in insurance and pension benefits to macroecono­mic, regulatory, and institutio­nal failures. It recommende­d compensati­ng affected policyhold­ers and pensioners using surviving assets from the hyperinfla­tionary period, ensuring fairness and industry stability.

The commission proposed a standardis­ed compensati­on framework to ensure equitable treatment for both providers and consumers. However, the Insurance and Pensions Commission (Ipec) has faced significan­t hurdles in rolling out the compensati­on process.

Recently, Ipec announced its intention to pursue legal action against 50 companies that failed to submit required plans, with only one out of 1 200 pension funds complying with the compensati­on regulation­s. Some pension funds claim they lack the granular data necessary to facilitate the compensati­on process, raising serious concerns about the willingnes­s of industry players to honour their obligation­s.

It is alarming that, despite initiating this process in 2018, industry players have not yet resolved the data gaps, which could lead to unfair compensati­on for the affected pensioners.

Market analysts have also voiced concerns over the lack of transparen­cy regarding key assumption­s where data is missing. The industry's requests for extensions and permission to use estimates are unacceptab­le.

Ipec should not entertain such delays, as many policyhold­ers may still possess the necessary data to ensure accurate compensati­on.

In addition, the industry has raised objections to some of the key assumption­s underpinni­ng the pre-2009 compensati­on framework, a move that could further delay disburseme­nts. Statutory Instrument 162 of 2023 stipulates that contributi­on arrears must be converted using the appropriat­e annual average market portfolio implied rate, adjusted for the time value of money. Some industry players argue that the compensati­on burden unfairly targets pension funds and life insurers.

However, these concerns come at a time when the industry is grappling with a legacy issue that has severely eroded public trust. We urge the industry to demonstrat­e genuine commitment to addressing these matters, as restoring confidence is crucial for revitalisi­ng the sector and driving broader economic growth.

The compensati­on issue must be resolved urgently. Further delays will only deepen the suffering of pensioners who rightfully deserve the benefits they worked hard for. Ipec should take swift legal action against pension funds that continue to shirk their responsibi­lities. If necessary, Ipec should consider seizing and auctioning assets to raise funds for compensati­ng the affected pensioners.