Data collection glitches stall 2008/09 loss of value compensation

Key among the hurdles in this compensation, was data integrity and the Treasury made several calls for the regulator, the Insurance and Pensions Commission (Ipec), to ensure the matter was resolved.
When authorities in 2022 sought to compensate for loss of value caused by the 2019 currency changes through a US$75 million Kuvimba disbursement, the process was met with several hurdles.

Key among the hurdles in this compensation, was data integrity and the Treasury made several calls for the regulator, the Insurance and Pensions Commission (Ipec), to ensure the matter was resolved.

Treasury reiterated the need for the regulator to address data integrity with key considerations, including a holistic business process re-engineering.

Other considerations included exploring the feasibility of ICT infrastructure sharing to save on thousands of United States dollars being paid outside the country as annual licence and maintenance fees and leveraging local ICT capacity.

Although the compensation finally took place, the 2009 compensation process is now grappling with the same challenges with lack of granular data threatening the off take of the process.

One of the main challenges is around the lack of granular data, the lowest level of detail that’s available within data collection.

Ipec last year directed insurers and pension funds to submit 2009 compensation schemes as an update for review and approval by December 31, 2023.

This was to pave way for the commencement of the hyperinflationary compensation process.

But during the regulator’s annual general meeting (AGM) recently, Ipec commissioner Grace Muradzikwa cited non-compliance with only one out of 1 200 submitted plans being in line with the requirements.

The overall problem for lack of compliance, according to Muradzikwa, was a lack of granular data.

“I think the critical issue right now is that we are trying to compensate pensioners for pre-2009. SI [Statutory Instrument] 162 of 2023 requires granular data for you to compute the prejudices. So, the actuaries and the pension funds are coming back to us and saying we have been able to compute the global prejudices,” she said.

“So, fund by fund, we are able to say all prejudices to all pensioners is US$50 million. Okay, who does this US$50 million belong to? So, the challenge we are having in reviewing these things is that we are sticking to the law, which is SI 162. They are saying ‘allow us to use estimates and judgments’, so that’s why I say it is the law versus practicality.”

She said pension funds were asking what the risk was in allowing them to use judgments and estimates.

Muradzikwa said the danger of using estimates was that there could be some pensioners out there who had real data.

“How then is the industry going to compensate such a pensioner using estimates?”

Industry, however, wants more time to gather the data.

Zimbabwe Association of Pension Funds chairperson Williefaston Chibaya, who attended the AGM, said given the data challenge and the timelines, it was only practical that the industry got more time.

But the commissioner said the matter had been dragging for too long and that no further extension was possible.

Finance, Economic Development and Investment Promotion deputy minister David Mnangagwa said the government wanted the issue to be finalised.

“It’s time we see closure on this issue,” he said.

Arguments at the AGM left an unanswered question: Is the 2009 compensation process ever going to take off at all?

“What I don’t understand is when the industry is saying it does not have data, was there a fire or what? If there was fire, was there no disaster management? I’m sure there are representatives here and are able to respond,” Zaka South legislator and chairperson of the Parliamentary Portfolio Committee on Budget and Finance Clemence Chiduwa, questioned.

“Our next action that we are going to take as Parliament is for you and the industry to appear before the committee so that you can tell the world that you don’t have data from people. And I think this is a matter that you can manage. Are we saying they don’t have data?”

Responding to this, Actuarial Society of Zimbabwe president-elect Prosper Matiashe said the challenge with obtaining granular data from the market is that some of the required data was not captured back then.

“Some of the data challenges, I think, emanate from when we were in 2000. For example, certain data fields that we now need for the exercise were not being captured. So, for example, where someone gets married, certain data was initially captured,” he said.

“You would actually find that in the systems, the unique reference that actually says it’s the same person that may not be there due to name changes. So, it’s a natural issue. But when you trace the name, it’s the same person. So, if in the system the ID [identification document] was not being captured, then you can’t prove to say it’s the same person, unless the pressure panel that the principal officer says is the same person.”

Thus, getting granular data was hard, according to Matiashe.

He recommended that when someone wants to join a fund, the industry creates a template that has a unique reference number so that in future, everything is centred on that number despite the name change.

“In some cases, for example, three months, you get that person was paid. But sometimes the date of payment is not there. So, for example, in 2006, you can’t be sure whether it was before the zeros were removed or after the zeros were removed,” Matiashe added.

“And, most of the information was in hard form, so what should we do? We should have migrated all the data from hard copy to digital. Even now, maybe we all say, for the last 20 years, we moved from hard copies to digital so that it becomes easy. What I’ve actually found is most of the data is in hard copy. Maybe there’s a lack to really go into the files and get that information.”

He said there were several ways to disaggregate it.

“I think there is a problem. Because for 2000, maybe you might not be able to find it. But for those that maintain the files, it’s just in hard copy and it’s in the formats that make it difficult to calculate,” Matiashe said.

“Maybe we are better off getting a process where you migrate all that hard copy information to digital so that for the next exercise or when someone comes and says, I want my digital data, you’ll be able to provide.”

Actuary Tapiwa Maswera said there was a problem with the data collection.

“[It] seems like we have a difficult situation and I do not see any easy way around it. If industry genuinely does not have the data, then we have a serious, a very big problem. There is no easy way of finding out whether industry genuinely does not have the data, or they are just not co-operating,” he said.

“It’s 15 years and three currencies later. The horse may have bolted. Regulation is mostly a character game. There are situations which sometimes require the regulator to play a tough cop. It boils down to whether we have the characters who can play tough cop in order to get this done.”

The general public is concerned if there is ever going to be justice for that loss of value from the 2008/09 hyperinflationary period, as some of the beneficiaries have died while others continue to wallow in poverty.-newsday