Unclaimed pension benefits surge
INSURANCE and Pensions Commission (Ipec) has revealed that unclaimed benefits in the pensions industry surged to US$10,18 million in the first nine months of 2024, marking a 69 percent increase compared to US$6,04 million recorded during the same period in 2023.
Ipec attributed the sharp rise in unclaimed benefits to under-reporting by some pension fund administrators in the prior year.
“Unclaimed benefits as of September 30, 2024 amounted to US$10,18 million (ZWG253,39 million) compared to US$6,04 million reported as of September 30, 2023, representing a nominal increase of 69,” reads a report accompanying the sector’s performance in the nine months of 2024.
“Additionally, the total membership with unclaimed benefits increased by 7,6 percent to 102 882 members, compared to 95 619 members as at September 30, 2023.”
The age analysis of unclaimed benefits revealed that 68 percent of the total liability pertained to benefits unclaimed for over 10 years. According to the Administration of Estates Act (Chapter 6:01), administrators are required to remit all unclaimed benefits exceeding five years to the Guardian Fund.
The commission continues to encourage the industry to comply with the above requirements by ensuring that all unclaimed benefits that are in the over five years category are remitted to the Guardian Fund as expected.
The third quarter of 2024 saw a decline in pension-related complaints, with 83 complaints lodged compared to 98 in the previous quarter. The complaints were distributed as follows: 33 in July, 35 in August and 15 in September.
“For the period under review, 81 percent of the complaints related to either unpaid pension benefits (46 percent) or low pension benefits (35 percent),” said Ipec.
“The most common complaints are delays in payments of pension benefits, low monthly pension benefits as well as low full commutation values under the defined contribution schemes.”
Ipec said 14 complex complaints, which is 17 percent of the total complaints were received during the quarter, mainly pertaining to the pre-2009 compensation, non-remittance of contributions as well as the 2019 currency conversion.
Compensation payments to pensioners whose savings were eroded during the hyper-inflationary period between 2007 and 2009 were deferred due to non-compliant submissions. Payments were initially scheduled to commence in March 2023 under Statutory Instrument 162 of 2023 (Compensation for Loss of Pre-2009 Value of Pension Benefits Regulations).
Trend of unclaimed benefits in US$ equivalent
The hyper-inflationary period between 2007 and 2009 severely eroded the value of savings, including pensions. In response to stakeholder concerns, the Government in 2025 established a commission of inquiry to investigate the causes and extent of the loss of value in life insurance policies and pensions following the 2009 currency conversion.
The commission, led by retired judge, Justice George Smith, found that many policyholders and pensioners were prejudiced during the conversion process. It recommended compensation for affected individuals.
Following the gazetting of the compensation framework in 2023, Ipec urged the industry to submit compensation plans for approval. However, by March 2024, none of the 1 249 assessed compensation schemes had been approved due to non-compliance with Statutory Instrument 162 of 2023(compensation regulations). —chrocile
