News / National
Zimbabwe govt to clear pre-2009 pensions backlog
6 hrs ago | Views
The Zimbabwean
Government is finalizing amendments to Statutory Instrument (SI) 162 of
2023 to fast-track compensation payments to private sector pensioners
who lost significant value in their savings due to the devastating
hyperinflation period before 2009.
Under President Emmerson Mnangagwa's administration, the State aims to complete payouts within the next three years, bringing closure to a long-standing financial grievance for many affected pensioners.
Zimbabwe abandoned its own dollar in 2009 after hyperinflation rendered it worthless. Subsequently, in 2015, the Government established the Justice Smith Commission of Inquiry, which confirmed that policyholders and pension scheme members suffered losses during the conversion of Zimbabwe dollar-denominated benefits to the US dollar-based multicurrency system. The commission recommended that affected individuals receive compensation.
The framework for these payments was set out under SI 162 of 2023, and the Government has begun disbursing compensation to its pensioners. Finance Minister Professor Mthuli Ncube, through his Ministry's finance director Kudakwashe Zata at the Insurance and Pensions Commission (IPEC) Annual General Meeting in Harare, underscored the urgency to resolve the overdue pre-2009 compensation.
"There is a need to bring closure to the issue of 2009 compensation, which is overdue. The Government has already commenced paying its pensioners and is committed to bringing the issue to finality within the next three years," the Minister said.
He urged the Insurance and Pensions Commission and the industry at large to take the matter seriously as Treasury actively pushes for amendments to operationalize the compensation process.
The 2025 National Budget also lists the resolution of these pre-2009 compensations as a key policy objective, alongside comprehensive reforms to the national pension system.
IPEC Commissioner Dr Grace Muradzikwa revealed that two pension funds have had their compensation frameworks approved, with US$522,000 already paid out from a total approved sum of US$750,000. She attributed earlier delays to challenges such as the lack of detailed data and difficulties separating assets during investigations.
To overcome these hurdles, Dr Muradzikwa explained that IPEC is now relying on financial statements rather than granular data, working closely with stakeholders to ensure closure.
"A once-off shareholder levy has been agreed upon to compensate pensioners. It is important to note that compensation is not restitution; it is impossible to fully compensate for what was lost," Dr Muradzikwa said.
The proposal includes minimum and maximum compensation amounts to be paid to pensioners. She emphasized the strong industry commitment to finalizing the compensation process and called on the Ministry of Finance and the Attorney-General's Office to support the initiative.
The insurance and pensions industry continues to grapple with legacy issues stemming from hyperinflation's impact on pension values. Currently, the pension penetration rate stands at around 2 percent, but Dr Muradzikwa highlighted potential growth if the industry develops products better suited to client needs.
"We are challenging the industry to rethink and develop relevant products. We have even recalled some existing Life Assurance products to ensure they remain suitable. With innovation, growth is achievable," she stated.
Minister Ncube also emphasized the Government's vision for the insurance and pensions sector to support broader economic goals, including climate resilience in agriculture through insuring smallholder farmers and investments in irrigation and renewable energy.
Treasury is working on a five-year financial sector development plan aimed at aligning investments with national development strategies. Ncube confirmed that prescribed asset status would be granted to qualifying public and private sector investments that deliver value for policyholders and advance financial development priorities.
The amendments to SI 162 and renewed industry collaboration signal significant progress toward addressing the long-standing pension losses faced by many Zimbabweans affected by the hyperinflation era.
Under President Emmerson Mnangagwa's administration, the State aims to complete payouts within the next three years, bringing closure to a long-standing financial grievance for many affected pensioners.
Zimbabwe abandoned its own dollar in 2009 after hyperinflation rendered it worthless. Subsequently, in 2015, the Government established the Justice Smith Commission of Inquiry, which confirmed that policyholders and pension scheme members suffered losses during the conversion of Zimbabwe dollar-denominated benefits to the US dollar-based multicurrency system. The commission recommended that affected individuals receive compensation.
The framework for these payments was set out under SI 162 of 2023, and the Government has begun disbursing compensation to its pensioners. Finance Minister Professor Mthuli Ncube, through his Ministry's finance director Kudakwashe Zata at the Insurance and Pensions Commission (IPEC) Annual General Meeting in Harare, underscored the urgency to resolve the overdue pre-2009 compensation.
"There is a need to bring closure to the issue of 2009 compensation, which is overdue. The Government has already commenced paying its pensioners and is committed to bringing the issue to finality within the next three years," the Minister said.
He urged the Insurance and Pensions Commission and the industry at large to take the matter seriously as Treasury actively pushes for amendments to operationalize the compensation process.
The 2025 National Budget also lists the resolution of these pre-2009 compensations as a key policy objective, alongside comprehensive reforms to the national pension system.
IPEC Commissioner Dr Grace Muradzikwa revealed that two pension funds have had their compensation frameworks approved, with US$522,000 already paid out from a total approved sum of US$750,000. She attributed earlier delays to challenges such as the lack of detailed data and difficulties separating assets during investigations.
To overcome these hurdles, Dr Muradzikwa explained that IPEC is now relying on financial statements rather than granular data, working closely with stakeholders to ensure closure.
"A once-off shareholder levy has been agreed upon to compensate pensioners. It is important to note that compensation is not restitution; it is impossible to fully compensate for what was lost," Dr Muradzikwa said.
The proposal includes minimum and maximum compensation amounts to be paid to pensioners. She emphasized the strong industry commitment to finalizing the compensation process and called on the Ministry of Finance and the Attorney-General's Office to support the initiative.
The insurance and pensions industry continues to grapple with legacy issues stemming from hyperinflation's impact on pension values. Currently, the pension penetration rate stands at around 2 percent, but Dr Muradzikwa highlighted potential growth if the industry develops products better suited to client needs.
"We are challenging the industry to rethink and develop relevant products. We have even recalled some existing Life Assurance products to ensure they remain suitable. With innovation, growth is achievable," she stated.
Minister Ncube also emphasized the Government's vision for the insurance and pensions sector to support broader economic goals, including climate resilience in agriculture through insuring smallholder farmers and investments in irrigation and renewable energy.
Treasury is working on a five-year financial sector development plan aimed at aligning investments with national development strategies. Ncube confirmed that prescribed asset status would be granted to qualifying public and private sector investments that deliver value for policyholders and advance financial development priorities.
The amendments to SI 162 and renewed industry collaboration signal significant progress toward addressing the long-standing pension losses faced by many Zimbabweans affected by the hyperinflation era.
Source - The Herald
