Drop in contributions worries IPEC
THE Insurance and Pensions Commission (IPEC) has expressed concern over declining contributions towards pensions and insurance savings in the past years, which has resulted in poor contributions towards investments in infrastructure development by the sector.
Across the globe, savings are critical in driving infrastructure development and as such when the savings are low there is not much activity in infrastructure development.
Speaking during the Smart Cities and Rural Connect Conference in Bulawayo yesterday, IPEC director of pensions and life insurance Mr Cuthbert Munjoma said the sector’s contribution to infrastructure development has been affected by the fall in contributions.
He blamed this on the fact that the bulk of the economic activities are in the informal sector and the volatility of the exchange rates.
“Post 2017, pension funds were receiving a cumulative US$415 million a year and following the conversion of the currency, which took place, people started losing confidence and contributions dropped to US$120 million in 2022,” said Mr Munjoma.
He said the informalisation of the economy had brought with it many challenges hence the drop in contributions.
Recently the National Social Security Authority (NSSA) stressed the need to introduce an informal sector scheme, which is meant to address challenges being faced by the sector.
Mr Munjoma said many people now opt for short-term policy schemes, which he said cannot be able to finance long-term investments.
He said pensions and life insurance are supposed to be long-term policies, which allow the sector to invest in different sectors.
“The pensions and insurance sector are investing in solar and irrigation projects, which are meant to support the Government’s vision of becoming an upper-middle-income economy by 2030 but the concern is the drop in contributions,” said Mr Munjoma.
He said there are plans to invest in new projects such as construction of health facilities and shopping malls and the recently completed Marondera Mall funded by Zimbabwe Electricity Supply Authority (Zesa) pension funds was a good example.
“The sector has also invested in university students accommodation and we have one in Bulawayo and the other one in Chinhoyi,” said Mr Munjoma. —-chronicles
