Online Reporter
Oliver Kazunga [email protected]
GOVERNMENT has released US$5 million towards compensation for former pensioners who lost the value of their savings before 2009, with payments already having been made under two approved pension schemes as efforts intensify to conclude the long-awaited exercise.
During the hyperinflationary period that ended in February 2009, the value of most pension contributions and savings, including insurance and pension policies, was severely eroded.
The Justice Smith Commission of Inquiry, appointed by the Government in 2015 to investigate the conversion process, attributed the loss in value largely to weak regulatory oversight and flaws in the demonetisation of the local currency following the transition to a United States dollar-dominated multicurrency regime.
The commission found that policyholders and pensioners suffered substantial losses due to the failure by the Government, the Insurance and Pensions Commission (Ipec) and industry players to establish a fair and equitable framework for converting insurance and pension values from Zimbabwe dollars to US dollars.
Speaking during the inaugural Regulators Forum organised by the Consumer Protection Commission (CPC) in Harare this week, Ipec manager for market conduct and supervision, Mr Elliot Tsuro, said Government had earmarked US$75 million for the compensation programme.
“So, in terms of the compensation exercise, the Government allocated US$75 million towards the compensation exercise — and so far, US$5 million has been spent towards that cause. And out of all the pension fund schemes, two have been approved; disbursements have already been made to policyholders,” he said.
To accelerate the compensation programme, the Government is amending Statutory Instrument 162 of 2023, which is currently before the Attorney-General’s Office, to address one of the major obstacles delaying implementation — incomplete or missing pension records.
The pre-2009 compensation framework is provided for under Statutory Instrument 162 of 2023, the Compensation for Loss of Pre-2009 Value of Pension Benefits Regulations, which came into effect on October 1, 2023.
Under the regulations, pension funds and life assurance companies were required to submit compensation plans within 90 days of the enactment of the statutory instrument.
Ipec was then expected to assess and approve the plans within 30 days, provided they complied with the prescribed requirements.
Based on those timelines, compensation payments were expected to commence at the beginning of the second quarter of 2024.
However, Mr Tsuro said a significant number of submissions from industry players failed to satisfy the required criteria, with one of the major challenges being the unavailability of complete member records within some pension funds.
The absence of reliable records, he said, had made it difficult to accurately identify beneficiaries and allocate assets for distribution.
“One of the sticking issues in terms of compensation is the issue of the database — some pension funds no longer have data for their pensions, so they cannot prepare the numbers so that they can allocate assets for distribution to various pension funds’ members,” he said.
It is understood that the proposed amendments to Statutory Instrument 162 of 2023 will create a framework to address the database deficiencies that have hampered progress in several pension funds.
The compensation programme forms part of broader Government efforts to restore public confidence in Zimbabwe’s pensions and insurance sector, while strengthening consumer protection and enhancing regulatory oversight across the financial services industry.
