Govt earmarks US$175m for pre-2009 pension losses

THE Government has earmarked US$175 million to compensate pensioners for pre-2009 losses, Finance, Economic Development, and Investment Promotion Minister Professor Mthuli Ncube has said.

During the hyperinflationary period to February 2009, the value of most pension contributions and savings (including insurance and pension policies) was extensively eroded.

The Justice Smith Commission of Inquiry, which was appointed by the Government in 2015 to probe the conversion process, blamed the value loss largely on poor regulatory enforcement and a flawed demonetisation process for the local currency following the currency switch to a US dollar-dominated multicurrency regime.

The commission concluded that policyholders and pensioners suffered huge losses owing to the failure of the Government, the Insurance and Pension Commission, and industry players to set up a fair and equitable process of converting insurance and pension values from Zimbabwe dollars to US dollars.

In an interview at the end of a breakfast meeting with players in the insurance and pensions industry organised by IPEC in Harare this week, Prof Ncube said; “As Government, we have set aside US$175 million for the compensation of pensioners for the pre-2009 losses, and we are urging the industry to work with the Government for us to begin compensating the pensioners in earnest.”

Prof Ncube said he was pleased with the progress made so far in trying to compensate pensioners and insurance policyholders for the loss of value suffered during the pre-2009 era.

“Of course, they are still working out some modalities…but we hope that this is something where we can make progress on.

“I am pleased with the progress, so far we have even gotten to a point where we now have that compensation framework and the Government committing resources, so now we need to begin making the payouts,” he said.

In his address at the breakfast meeting, Prof Ncube said the country needed to close the compensation issue.

“On the issue of compensation, captains of industry, we need to bring closure to this issue. The commission of inquiry was concluded in 2017 and seven years later we are still finger-pointing and making wild actuarial assumptions here and there,” the minister said.

In her welcome remarks, IPEC commissioner general Dr Grace Muradzikwa said the pre-2009 compensation process had been “unnecessarily” protracted, but expressed optimism that the matter would be concluded soon.

“The pre-2009 compensation has been unnecessarily protracted and remains the elephant in the room for the industry.

“But we are hoping that 2024 will see the crystallisation of all our efforts, especially on compensation.

“We stretched our target of compensation for pensioners in line with the commission of inquiry recommendations.

“Together with the support from the industry, we should be able to achieve this milestone,” she said.

Speaking during the same occasion, a representative from the Zimbabwe Insurance and Pensions Association Council Mr Willie Chibaya said matters arising from their engagement with the Government last year included the insurance of public assets, registration to ring-fence foreign direct investment, and possible long-term insurance and pensions….

“We have had engagements minister in the past and there are matters that were brought up before, we need to assess these engagements and see whether we are moving forward with some of the issues and also to give you feedback on some of the matters that we have discussed in the past.

“As an industry, we now await further guidance on the way forward,” he said.-herald