The Sunday Mail
Contrary to claims by pensioners that their contributions are going to waste, pension societies seem to have been at the forefront of funding national development programmes through the provision of public funding, says a senior official from NSSA.
After investing in real estate, bonds and the stock market, among other investment vehicles, pension funds have channelled some of the profits to public financing initiatives.
Last year the National Social Security Authority published a notice advising stakeholders that from November 2012 to March 2013, it provided loans amounting to US$15 million to six local authorities for purchase of water chemicals, water pipes and earthmoving equipment.
Another pension fund, Old Mutual, provided US$20 million for the Distressed and Marginalised Areas Fund (DiMAF).
Pension funds are compelled by law to invest 35 percent of their income in the public sector.
In 2011, pension fund investments on the Zimbabwe Stock Exchange were estimated at about US$2,5 billion.
It was established that between 60 and 65 percent of the investments on the bourse were controlled by pension funds. The Confederation Zimbabwe of Industries at one time lobbied the Government to allow pension funds to use their resources to bail out struggling companies.
Mr Nicholas Mutingwende, a pension fund expert, said pension funds play a pivotal role in national development.
“Pension funds play a pivotal role in national development. They have been a source of public financing and this should be commended. It is grossly unfair for anyone to completely ignore the important national role that pension funds play,” Mr Mutingwende said.
Pension funds are expected to play an even greater role in infrastructural development in the near future.
Despite playing such an important role in national investments, Mr Mutingwende said the pension fund sector is often misunderstood.
“Pension funds are doing a lot in terms of development. The problem is that this sector is not understood. Pensioners are paid according to the contributions they would have made and also according to the financial standing of the pension fund,” added Mr Mutingwende.
According to players in the pension fund sector, operations at pension funds are thoroughly scrutinised, leaving little room for unprofessional conduct.
At the end of each financial year, pension funds are compelled by law to present their financial standing to an actuary.
An actuary is a business professional who analyses financial risk especially in insurance and pension programmes.
The actuaries will make their calculations and it is from these calculations that pensioners’ monthly payouts are determined.
To curb the illegal activities by some of the unscrupulous pension funds, Government, in 2001, established the Insurance and Pensions Commission (IPEC). The commission supervises the pensions industry and protects the rights, benefits and other interests of policyholders including pension scheme members.
It was also established to inspire public confidence in the insurance and pension sectors.
More than 500 pension funds are listed on the IPEC roll, but the majority of the pension funds are no longer in existence since their parent companies have either closed or relocated.
A rough estimate puts Zimbabwe’s pensioners at around one million, with the majority of them being ex-Government workers.
Investigations revealed that most pensioners are given payouts of between US$15 and US$300.
Former Government workers are among some of the pensioners that are given decent payouts with some getting as much as US$300 every month.
Players in the pension fund sector are calling on the Government to enforce the laws that compel companies to remit pension fund contributions so that the pension sector continues to oil national development programmes.