News / National
Industry in $600m pension arrears, Parliament told
15 Jan 2019 at 01:28hrs | Views
THE Insurance and Pensions Commission (IPEC) yesterday disclosed to Parliament that industry owed more than $600 million in pension arrears against a retirement fund value of $5 billion.
"The industry is in $600 million arrears in terms of pensions against a pension fund value of about $5 billion, and there was also loss of value in pensions when the country changed from Zimbabwean dollar to United States dollar currency," IPEC acting commissioner Blessmore Kazengura told the Parliamentary Portfolio Committee on Finance chaired by Chikomba Central legislator Felix Mhona.
Josphat Kakwere, the IPEC risk management and pensions analyst, added: "It is true that the Justice Smith commission of inquiry found out that pensioners in Zimbabwe did not receive their dues in line with their reasonable expectations — and it is quite depressing because even we, as a commission, have been overwhelmed by complaints in this regard and the Commission of Inquiry recommended a compensatory framework."
He said the biggest chunk of the $600 million arrears to pensioners is owed by parastatals such as the Cold Storage Company.
However, the IPEC officials said it was difficult to come up with a formula to calculate the prejudices to pensioners and insurance holders, particularly given that the country has only about eight actuaries.
Kakwere said to ensure that entities were compelled to pay compensation for pensions eroded by inflation, there was need for a legal instrument to force them to do that, as well as for different insurance and pensions specialists to sit down and come up with the correct index to be used to calculate pensions.
IPEC public relations manager Llyod Gumbo said more than 50 000 pensioners have also not claimed their pensions to the tune of $30 million due to different reasons such as lack of knowledge that they were contributing to a pension scheme.
Zimbabwe Pensions and Insurance Rights Trust (ZimPIRT) general manager Martin Tarusenga painted a very sorry state of affairs for pensioners saying that they were paid peanuts after contributing for years.
"The problems faced by pensioners and insurance policyholders include apparent disregard of concerns and rights of consumers and wrong benefit calculations. Pensioners and insurance policyholders have, for some time, submitted that benefits entitled by insurance companies and other pension houses are way below the full rightful benefits," Tarusenga said.
He also told the Finance committee that IPEC board was also staffed mainly by executives from insurance companies and the Finance ministry secretary, in conflict with its primary regulatory responsibility of protecting consumers.
Tarusenga also raised issues of pensioner and insurance holder prejudice, where he said outrageously wrong formulae was used to calculate benefits.
"It is apparent that insurance companies and other pension houses use several techniques to misappropriate pension and insurance funds. Notable among them is unregulated excessive charging of pension funds for services rendered," he said.
"The industry is in $600 million arrears in terms of pensions against a pension fund value of about $5 billion, and there was also loss of value in pensions when the country changed from Zimbabwean dollar to United States dollar currency," IPEC acting commissioner Blessmore Kazengura told the Parliamentary Portfolio Committee on Finance chaired by Chikomba Central legislator Felix Mhona.
Josphat Kakwere, the IPEC risk management and pensions analyst, added: "It is true that the Justice Smith commission of inquiry found out that pensioners in Zimbabwe did not receive their dues in line with their reasonable expectations — and it is quite depressing because even we, as a commission, have been overwhelmed by complaints in this regard and the Commission of Inquiry recommended a compensatory framework."
He said the biggest chunk of the $600 million arrears to pensioners is owed by parastatals such as the Cold Storage Company.
However, the IPEC officials said it was difficult to come up with a formula to calculate the prejudices to pensioners and insurance holders, particularly given that the country has only about eight actuaries.
Kakwere said to ensure that entities were compelled to pay compensation for pensions eroded by inflation, there was need for a legal instrument to force them to do that, as well as for different insurance and pensions specialists to sit down and come up with the correct index to be used to calculate pensions.
IPEC public relations manager Llyod Gumbo said more than 50 000 pensioners have also not claimed their pensions to the tune of $30 million due to different reasons such as lack of knowledge that they were contributing to a pension scheme.
Zimbabwe Pensions and Insurance Rights Trust (ZimPIRT) general manager Martin Tarusenga painted a very sorry state of affairs for pensioners saying that they were paid peanuts after contributing for years.
"The problems faced by pensioners and insurance policyholders include apparent disregard of concerns and rights of consumers and wrong benefit calculations. Pensioners and insurance policyholders have, for some time, submitted that benefits entitled by insurance companies and other pension houses are way below the full rightful benefits," Tarusenga said.
He also told the Finance committee that IPEC board was also staffed mainly by executives from insurance companies and the Finance ministry secretary, in conflict with its primary regulatory responsibility of protecting consumers.
Tarusenga also raised issues of pensioner and insurance holder prejudice, where he said outrageously wrong formulae was used to calculate benefits.
"It is apparent that insurance companies and other pension houses use several techniques to misappropriate pension and insurance funds. Notable among them is unregulated excessive charging of pension funds for services rendered," he said.
Source - NewsDay
