Unpaid pension contributions reach $ 3 billion

The Chronicle

Business journalist
The Insurance and Pensions Commission (IPEC) has threatened to expose the delinquent pension funds, fearing that unpaid pension contributions may have reached $ 3.05 billion in the first half of 2021.

In a statement marking the commemorations of International Retirement Awareness Day, celebrated annually on September 15, IPEC said the non-payment of pension contributions was hurting members at a time when many retirees struggled. to make ends meet.

“IPEC is concerned about the high levels of unpaid pension contributions, which stood at $ 3.05 billion as of June 30, 2021,” the regulator said.

“If they fail to pay the contributions, the participants do not receive any or are reduced because the pension fund would not have received the contributions.

“The Commission will publish the list of pension funds in arrears of contributions. Meanwhile, pension plan members are encouraged to use Pension Awareness Day to check whether their employers are making pension contributions to their pension funds. “

The Commission has also encouraged pension fund trustees to ensure that sponsoring employers make pension contributions. Another area of ​​concern is unclaimed pension benefits, which stood at $ 1.09 billion as of June 30, 2021.

“The Commission again encourages retirees who have not claimed their pension benefits to use Pensions Awareness Day to contact their pension funds directly or to search their names on IPEC’s unclaimed benefits search engine “, did he declare.

The Commission is running a Pension Awareness Month campaign, which has been set aside to remind people of the importance of saving for retirement. According to the latest two national census surveys conducted by the Zimbabwe Statistical Agency (Zimstat), life expectancy in Zimbabwe continues to increase from 44.2 years in 2002 to 60.7 years in 2012.

This implies that pensions are more likely to last longer, hence the need to plan for life after retirement, IPEC said.

The regulator recognizes, however, that confidence in the pension sector is undoubtedly at its lowest due to the loss of insurance and pension values ​​due to hyperinflation and the unintended consequences of the monetary reforms of 2009 and 2019.

In this regard, IPEC has stated that it is implementing measures to mitigate the effects of these losses, in accordance with its statutory mandate to protect the interests of policyholders and members of pension schemes.

“In accordance with the findings and recommendations of the Commission of Inquiry led by Justice Smith on the conversion of insurance and pension values, IPEC is working with key stakeholders on the terms of compensation for the 2009 losses, with actual payouts expected early next year, ”he said. noted.

In its assessment of the adequacy of the regulatory and supervisory regime, the Commission of Inquiry led by Justice Smith into the conversion of insurance and pension securities noted that IPEC did not have adequate expertise and expertise. supporting legislation to provide guidance to the insurance and pension industry on how to convert insurance and pension values, following the adoption of the multi-currency system in 2009.

Admittedly, IPEC was only three years old at the time, after its weaning by the Ministry of Finance and Economic Development in 2006. At that time, it lacked some of the skills required to regulate the insurance industry. and actuarial, accounting, legal, investment management and economics, among others.

“As part of the post-inquiry reforms, the Commission now has sufficient resources in terms of staff, skill mix and its enabling legislation, currently before Parliament, is being strengthened,” said the regulator.

Drawing lessons from the 2009 currency conversion, the Commission issued a directive on the adjustment of insurance and pension values ​​in response to the 2019 currency reforms in March 2020.

As a result, policyholders and pension plan members have seen their benefits significantly increased, with pension funds reporting annualized premiums and pension increases.

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