Relief for pensioners as regulator approves compensation

Pensioners who lost their savings between the period 2000 and 2009 will start receiving compensation commencing March 2024, the Insurance and Pensions Commission (IPEC) has said.

This follows a long period of engagements between stakeholders to come up with a compensation plan also aimed at restoring confidence in the sector which suffered after pension funds lost values during the hyperinflationary period of 2008/9, which ushered in a change in currency – to dollarisation.

To help in addressing this thorny issue, Government has also committed to supplement funding for the exercise while IPEC will chip in in a small way.

Addressing journalists during a virtual briefing, IPEC Commissioner, Dr Grace Muradzikwa, outlined the compensation roadmap, including timelines and eligibility for compensation.

According to IPEC, every member or former member of a fund or insurer that offered private occupational or personal pension plans during the period 01 January 2000 to 28 February 2009 will be eligible for compensation.

These include active member, active pensioner, deferred pensioner, suspended pensioner, beneficiary, members or beneficiaries who exited the fund through death or other means contemplated by the rules of the fund. For defined benefit schemes, only members who exited during the period 01 January 2000 to 28 February 2009, shall be compensated.

Dr Muradzikwa, however, highlighted that pensioners who were paid in currencies other than the Zimbabwe dollar during the same period are not eligible for compensation under these regulations.

“These did not experience loss of value,” she said, adding that “the form of compensation will depend on whether the affected individual is still employed or is now receiving a pension.”

In terms of timelines, liable insurers or pension funds are required to submit compensation plans to the Commission, including the list of eligible policyholders or pension fund members and the compensation amounts within 90 days after the Regulations come into effect (by 31 December 2023).

IPEC will then analyse the compensation plan and either approve or reject the proposed compensation plan (if it does not meet the expected standard) within 30 days after receiving the compensation plan, which is by 30 January 2024.

If IPEC approves the compensation plan, the insurer or pension fund will be expected to start paying eligible policyholders or pension fund members no later than 30 days after the IPEC approval, which is by March 02, 2024.

Dr Muradzikwa also added that compliance was critical for the success of this exercise, which is also going to help restore confidence. In case of struggling pension funds, Dr Muradzikwa said it was imperative for administrators of such funds to approach the Commission to map a way forward.

“We do not expect non-compliance because we have engaged stakeholders on every stage of implementing this whole exercise. Compensation is also key to boost confidence in the sector,” she said.-ebusinessweekly