News / National
Zimbabwe govt owes Zisco pensioners US$38 million
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The Ministry of Finance, Economic Development and Investment Promotion is reportedly in arrears of US$38.7 million owed to former ZiscoSteel workers, according to a damning report by Parliament's Portfolio Committee on Budget, Finance and Investment Promotion.
The report exposes serious discrepancies in the handling of pension contributions following Zimbabwe's currency transition and highlights systemic failures by ZiscoSteel, First Mutual Life (FML), and the Insurance and Pensions Commission (Ipec) between 2009 and 2017.
Between 2009 and 2016, ZiscoSteel deducted pension contributions from employees in US dollars but failed to remit them to FML. When the government assumed the company's debt and attempted to settle the pension arrears in 2021, it paid ZWL$39.2 million - using a 1:1 exchange rate with the US dollar - despite the prevailing interbank rate being US$1 to ZWL$90.
"The ministry paid the US$39.1 million in 2021 using a rate of 1:1 in accordance with the law. However, the interbank rate had moved to 1:90 in 2021," the report stated.
This move, the committee says, resulted in pensioners being shortchanged, with the actual shortfall amounting to US$38.7 million.
The report also criticised the delay in implementing reforms recommended in the Justice Smith Report of 2017, which called for compensation for pension value erosion due to currency changes. Although the government introduced Statutory Instrument 162 of 2023 – Pensions and Provident Funds to address this, the committee noted that it remains largely unimplemented.
"The statutory instrument is gathering dust in terms of actual implementation," the committee remarked.
The committee also referenced a 2018 actuarial valuation that calculated the pension liability at US$61.5 million - far above the amount paid. Parliament had passed the Zimbabwe Iron and Steel (Debt Assumption) Act in 2018 to pave the way for settling such debts, but implementation has lagged.
"The Ministry of Finance and Ipec should actualise the implementation of SI 162 of 2023 by December 2025," the report recommended.
It also urged the amendment of the Debt Assumption Act to align with the 2018 actuarial findings and current economic realities, noting that Ipec had failed in its regulatory duties over the years.
"Ipec, as the regulator, should act on all its omissions and commissions as well as strengthen the commission," the committee said.
The revelations underscore ongoing concerns over pension security in Zimbabwe and the long-term effects of poor corporate governance and government inaction on pensioners' livelihoods.
Pensioners, many of whom have waited nearly a decade for redress, continue to suffer as the financial value of their contributions diminishes amid inflation and delayed justice.
The report exposes serious discrepancies in the handling of pension contributions following Zimbabwe's currency transition and highlights systemic failures by ZiscoSteel, First Mutual Life (FML), and the Insurance and Pensions Commission (Ipec) between 2009 and 2017.
Between 2009 and 2016, ZiscoSteel deducted pension contributions from employees in US dollars but failed to remit them to FML. When the government assumed the company's debt and attempted to settle the pension arrears in 2021, it paid ZWL$39.2 million - using a 1:1 exchange rate with the US dollar - despite the prevailing interbank rate being US$1 to ZWL$90.
"The ministry paid the US$39.1 million in 2021 using a rate of 1:1 in accordance with the law. However, the interbank rate had moved to 1:90 in 2021," the report stated.
This move, the committee says, resulted in pensioners being shortchanged, with the actual shortfall amounting to US$38.7 million.
The report also criticised the delay in implementing reforms recommended in the Justice Smith Report of 2017, which called for compensation for pension value erosion due to currency changes. Although the government introduced Statutory Instrument 162 of 2023 – Pensions and Provident Funds to address this, the committee noted that it remains largely unimplemented.
"The statutory instrument is gathering dust in terms of actual implementation," the committee remarked.
The committee also referenced a 2018 actuarial valuation that calculated the pension liability at US$61.5 million - far above the amount paid. Parliament had passed the Zimbabwe Iron and Steel (Debt Assumption) Act in 2018 to pave the way for settling such debts, but implementation has lagged.
"The Ministry of Finance and Ipec should actualise the implementation of SI 162 of 2023 by December 2025," the report recommended.
It also urged the amendment of the Debt Assumption Act to align with the 2018 actuarial findings and current economic realities, noting that Ipec had failed in its regulatory duties over the years.
"Ipec, as the regulator, should act on all its omissions and commissions as well as strengthen the commission," the committee said.
The revelations underscore ongoing concerns over pension security in Zimbabwe and the long-term effects of poor corporate governance and government inaction on pensioners' livelihoods.
Pensioners, many of whom have waited nearly a decade for redress, continue to suffer as the financial value of their contributions diminishes amid inflation and delayed justice.
Source - newsday
