Call for the scaling up of adoption of pension and insurance packages

AMID concern over the continued low uptake of pension schemes especially by the working class in Africa, Zimbabwe included, stakeholders have called for the scaling up of formalisation of young and upcoming businesses to ensure the adoption of pension and insurance packages.

In Zimbabwe, a majority of the workforce is in the informal sector and the situation is not unique to the country as other nations, including Italy, which chairs the International Organisation of Pension Supervisors (IOPS) has the highest informal sector in Europe, according to official reports.

Most people in the informal sector neither have insurance nor pension schemes and in Zimbabwe, thousands lost pension savings due to currency change and hyperinflation in recent years.

Speaking at the Joint International Organisation of Pension Supervisors (IOPS)-Organisation for Economic Co-operation and Development (OECD) Global Forum on Private Pensions in Victoria Falls last week, experts in the pensions sector said there is a need to include the informal sector in pension schemes.

According to research, only eight percent of the working age in Sub-Saharan Africa have pension funds compared to 32 percent globally, with less than 20 percent of formal employment in the continent, economists have said.

Experts have, however, said this presents opportunities.

Finance, Economic Development, and Investment Promotion Deputy Minister, David Mnangagwa, said there is a need to formalise the informal sector and have all citizens access pension schemes.

“The issue of the informal sector is a cross-cutting issue internationally as you heard Italy has one of the largest informal sectors in Europe,” he said.

“Regulators across the globe are, thus, focused on the issue. I am glad we have the micro pension framework put in place by Ipec (Insurance and Pensions Commission) and what we need to do is convince the pension funds themselves to come up with programmes that will allow the informal sector to be included and participate in pension schemes.”

Pension regulators from over 40 countries across the world attended the forum, which ended on Thursday.

Head of the Insurance and Pensions Commission (Ipec), Dr Grace Muradzikwa, said efforts are being made to bring back the sector to its feet.

“We won the bid to host this two years ago and it is the first time we are hosting the in-person meeting. We thought of engaging so that we revive the sector in response to loss of value in 2009 and currency, which led to pensioners losing their savings in 2019,” she said.

“As a commission, we have done a lot of work to make sure we restore value, and as you are aware we came up with SI 162 two weeks ago providing guidance for the industry on how they should compensate pensioners.

“We also issued a guidance paper on how the industry should compensate pensioners for loss of value hoping that we restore confidence.”

Dr Muradzikwa said the regulator was looking forward to the industry providing some level of compensation as the sector wants to see the industry becoming vibrant again.

Globally, the pension and insurance sectors have the largest pool of resources used in driving new investments to develop economies while creating higher value for subscribers.

The need to have focused discussions on retirement income becomes a priority for most governments as they seek to ensure social protection in line with Sustainable Development Goals (SDGs).

According to the International Labour Organisation (ILO), the informal sector is a significant part of the African economy accounting for over 86 percent of the employed population.

The conference was being held under the theme: “Entrenching Retirement Security in a Changing World”.