IPEC sets Dec deadline for compensation plans
THE Insurance and Pension Commission (IPEC) has given pension funds and insurance companies up to December 31, 2023 to submit compensation frameworks for the values lost by clients due to hyperinflation.
Appropriate regulatory action, IPEC said, will be taken against those institutions that fail to comply with the stipulated time frame and compensation requirements.
This marks a significant step towards resolving the long-standing issue of compensating for the losses incurred during the hyperinflationary period between 2008 to 2009.
Zimbabweans suffered an erosion of pension fund and insurance policy values largely as a result of the effects of hyperinflation experienced from 2000 up to 2009 and the subsequent conversion of currency from Zimbabwe to US dollars.
Pension fund values were badly eroded in values due to devastating hyperinflation, which soared to a record 500 billion percent in 2008, according to the IMF.
The Government dealt with the hyperinflation crisis in 2009 when it abandoned the Zimbabwe dollar for a basket of foreign currencies, dominated by the United States dollar, leading to what was generally called dollarisation.
The Government then appointed a commission of inquiry, chaired by retired Justice Smith, which confirmed the “huge” loss of value and recommended compensation for the losses suffered.
Some of the pensioners got zero values owing to a lack of benefit inflation-indexation and currency de-basing. That left many people, after years of hard work, poor.
According to IPEC, every compensation scheme shall at a minimum include, in the case of a life insurer, an asset separation report covering the investigative period.
The report shall include a clear split of the policyholder and shareholder funds for each year of the investigative period, a separation of insurance and pensions assets, a clear split of assets between different product lines, and a list of assets backing the policyholder and shareholder accounts during the investigative period.
It should be backed by an actuarial report clearly showing the members to be compensated, the compensation amount, methodology, any assumptions made, and the proposed sources of funding for the prejudice suffered by affected members.
The scheme should also include a detailed schedule of affected members, along with their respective compensation payouts. Additionally, the report should contain a resolution signed by the board of the fund or insurer adopting the compensation scheme.
“This resolution should also outline the method by which affected members will be informed of the compensation scheme and the manner and extent of their compensation. The documents as attachments to the scheme as the commission may reasonably require by notice in writing to the fund or insurer concerned.
“The commission shall institute appropriate regulatory intervention…on institutions that fail to comply with the stipulated time frames in the regulations,” said IPEC.
-herald
