The Sunday Mail
Business Reporter
PENSIONS fund companies owing over $620 million in outstanding contributions will face public humiliation after the regulator, the Insurance and Pensions Commission (Ipec), revealed it will periodically name and shame non-compliant entities.
Ipec is the regulating body of the insurance and pension industry in Zimbabwe.
In its document setting guidelines for the sector, Ipec indicated that it will name and shame the top 40 pension fund companies which have not come forward with payment plans to settle their contribution arrears.
The move is expected to rescue members of such pension funds who might be languishing in poverty as their sponsoring companies are not remitting contributions.
“Ipec shall publish a list each quarter in mass media listing the top 40 companies with pension contribution arrears and the amount of such pension arrears, for companies that have not signed Certified Repayment Agreements,” reads part of the guidelines.
The document also outlines a raft of measures put in place to adjust insurance and pension values in tandem with the currency reforms that have been effected over the past decade.
Ipec public relations manager Mr Lloyd Gumbo said contribution arrears had soared to over $600 million by end of last year.
“This means that members whose contributions were not remitted may be living in poverty today because they cannot get their benefits from the pension funds owing to failure by their employers to remit the contributions,” he said.
Insurance and pension companies struggling to remit contributions have been given the leeway to make payment plans.
The repayment plan can stretch for a 10-year period for Pension Fund Companies with significant outstanding obligations.
Mr Gumbo said the 10-year period was informed by the desire to ensure there is business continuity as some of the entities are struggling to pay salaries.
“If we insist on full recovery of the contributions within a very short time, this may result in some companies closing operations, hence retrenchment of the same people we are trying to protect.
“So it is a very reasonable time-frame, notwithstanding the harsh inflationary environment,” he said.
A number of policy reforms undertaken in the past decade have had a negative impact on insurance and pension values.
The hyperinflationary environment obtaining between 2008 and 2009 led to significant loss of value for policyholders and pension fund members.
Government, however, switched to a multi-currency system in 2009.
In 2016, the bond note was introduced and was at par with the US dollar.
As a result of currency reforms and other Government measures, insurance companies and pension funds converted all insurance transactions from USD to Zimbabwean dollar using the parity rate.
The RTGS dollar was subsequently introduced in February 2019 by the RBZ at an exchange rate of 1:2,5 against the USD.
The depreciation of the RTGS against the USD adversely affected the insurance and pensions industry, with companies struggling to remit contributions while members continued to suffer loss in value.
Some of the proposed measures to compel sponsoring employers to remit contributions in time and retain value are contained in the Pension and Provident Fund Bill.
Ipec says the new Bill will also hold managerial staff in companies accountable for non-remittance of their employees’ pension contributions.
