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Judith Phiri, Business Reporter
THE Insurance and Pensions Commission (Ipec) will dissolve about 36 percent of registered pension funds that have become inactive for extended periods, some dating back to 2009.
Section 19 of the Pension and Provident Funds Act (Chapter 24:09) empowers the Commission to direct the dissolution of a fund, if the Commission considers that the fund is in an unsound financial condition. The pensions sector has close to 980 registered funds.
In a Capacity Building Pensions Industry Webinar last week, Ipec pensions manager, Ms Tariro Muteisanwa said work was under way to dissolve inactive pension funds.
“Ipec is concerned that about 36 percent of registered funds are inactive with the majority having been inactive for an extended period, some dating back from 2009.
We raised risk management considerations as it has become difficult to deal with corporate governance deficiencies affecting these funds as most no longer have a Board of Trustees.”
She said it was also important to deter loss of value through continued costs or unjustified prolonged preservation of benefits and Ipec has issued dissolution guidelines.
“The directive gives criteria to be applied in deciding whether an inactive fund can be considered financially unsound. Fund administrators have a duty to disclose all such funds that qualify for dissolution in line with defined criteria. We expect compliance with the directive read with the Act and circular 10 of 2019,” she added.
Ms Muteisanwa said the existence of the troubled pension funds has become a threat to members’ values. In terms of expectations or role of trustees and fund administrators, she said there was need for a monitoring exercise to ensure compliance with Directive read together with Act and Circular 10 of 2019.
“Among other key expectations are provision of data for conducting valuations, adequacy of disclosures to the members, monitoring expenses and consolidation of funds significantly or fully invested in Guaranteed fund to enable conduct of valuation on the pool.
Also ensure substitution of board of Trustees for Committee of members were there is no board of Trustees or board of Trustees is incapacitated.”
Bongani Ndlovu