Unremitted pension contributions clock $3bn
THE Insurance and Pension Commission (IPEC) has threatened to expose pension funds who are in arrears amid concern that unremitted pension contributions have ballooned to $3,05 billion in the first half of 2021.
In a statement to mark commemorations for the International Pensions Awareness Day, which is observed on September 15, annually, IPEC said failure to remit pension contributions was prejudicing members at a time when many retirees are struggling to make ends meet.
“IPEC is concerned with the high levels of unremitted pension contributions, which stood at $3,05 billion as at 30 June 2021,” said the regulator.
“Failure to remit contributions results in members receiving none or reduced as the pension fund would not have received the contributions.
“The Commission will be publishing the list of pension funds in contribution arrears. Meanwhile, pension scheme members are urged to use the Pensions Awareness Day to check whether their employers are remitting pension contributions to their pension funds.”
The Commission has also encouraged pension fund trustees to ensure that sponsoring employers remit pension contributions. Another area of concern has been unclaimed pension benefits, which had risen to the tune of $1,09 billion as at 30 June 2021.
“The Commission again encourages pensioners who have not claimed their pension benefits to use the Pensions Awareness Day to contact their pension funds directly or search for their names on the IPEC unclaimed benefits search engine,” it said.
The Commission is running a Pensions Awareness Month campaign, which was set aside to remind people about the importance of saving for retirement. According to last two national census surveys conducted by the Zimbabwe Statistical Agency (Zimstat), Zimbabwe’s life expectancy continues to increase from 44,2 years in 2002 to 60,7 years
in 2012.
This implies that, there are higher chances that retirements are likely to last longer, hence the need to plan for life after retirement, said IPEC.
The regulator, however, acknowledges that confidence in the pension sector is arguably at its lowest owing to the loss of insurance and pension values due to hyperinflation and the unintended consequences of the 2009 and 2019 monetary reforms.
In that regard, IPEC said it was implementing measures to mitigate the effects of these losses, in line with its statutory mandate of protecting the interests of policyholders and pension scheme members.
“Pursuant to the findings and recommendations of the Justice Smith-Led Commission of Inquiry into the Conversion of Insurance and Pension Values, IPEC is working with key stakeholders on compensation modalities for the 2009 losses, with actual pay outs expected early next year,” it said.
In its assessment on the adequacy of the regulatory and supervisory regime, the Justice Smith-led Commission of Inquiry into the Conversion of Insurance and Pension Values noted that IPEC did not have adequate skills and supporting legislation to provide guidance to the insurance and pensions industry on how to convert insurance and
pension values, following the adoption of the multicurrency system in 2009.
Admittedly, IPEC was only three years old at the time, after its weaning off by the Ministry of Finance and Economic Development in 2006. At that time, it did not have some of the requisite skills for regulating the insurance and pensions industry, such as actuarial, accounting, legal, investment management and economics, among others.
“As part of post-inquiry reforms, the Commission is now adequately resourced in terms of head count, skills mix, and its enabling legislation, which is currently before Parliament, is being strengthened,” said the regulator.
Drawing lessons from the 2009 currency conversion, the Commission issued a Guideline on Adjustment of Insurance and Pension Values in Response to the 2019 Currency Reforms in March 2020.
As a result, policyholders and pension scheme members had their benefits reviewed upwards significantly with pension funds declaring annualised bonuses and pension increases.-The Chronicle
