adminBelow are exceprts from the interview:
HB: Mr Tarusenga, could you very briefly tell us about your organisation?
MT: Very briefly, ZimPIRT is an organisation that was set up to achieve objectives as stated in our Deed of Trust. Key among the objectives are:
- To assist members to obtain appropriate restitution for any loss or prejudice occasioned by and consequent upon their membership of any pension fund or being an insurance policyholder and to ensure that future pension fund members’ and insurance policyholders’ rights are given due respect by insurance companies;
- To minimise pension fund membership and insurance policyholder destitution arising from mismanagement of pension and insurance funds;
- To advocate transparent management, regulation and supervision of pension and insurance funds; and in accordance with established best practice, and in this regard to advocate the review of regulations in order to close loopholes used by fund managers that prejudice members and policyholders;
HB: So how come the pension crisis is still not resolved so many years after pensioners and insurance policyholders registered their dissatisfaction with pension and insurance benefit entitlements?
MT: We could start by putting the question in context by defining the crisis. This is really a dispute between pensioners and insurance policyholders in Zimbabwe, on the one hand, and insurance companies on the other.
At a national level or wide scale like this, the judge or referee mandated to intervene and resolve this dispute, is in the first place, the regulator of the insurance and pension industries, Insurance and Pensions Commission (IPEC,) in this case.
Of course the Minister of Finance is ultimately responsible for ensuring that IPEC acts to resolve the crisis. I agree with you that many years have elapsed since this dispute became known; and there has been ample time for either IPEC and/or the Minister of Finance to act to resolve the crisis. They have, however, not done so.
HB: What really is the pensioner and insurance case against insurance companies?
MT: A very general answer to that question can be obtained when one holds discussions with pensioners, pension fund members in general and insurance policyholders. The quick ready answer that you will get from them is that “ . . . the insurance company paid me back far less than what I invested with them over very many years . . .” More bluntly, this translates to the charge by pensioners, pension fund members and insurance policyholders that insurance companies stole their money. Indeed, some of them actually openly say the latter.
There is definitely a need for a survey that can document answers from pensioners, pension fund members and insurance policyholders , this in order to capture the specific case against insurance companies made by pensioners, pension fund members and insurance policyholders. The cases so far made against insurance companies fall in the following categories:
- Insurance companies paid a wrong benefit type, typically forfeiting some of the members’ rights in the pension arrangement, e.g. paying a withdrawal benefit instead of a retirement benefitInsurance companies ignored the real (US$) worth of contributions or premiums made into the pension arrangement over the membership period, by the member or policyholder and for the member by the sponsoring employer.
- Insurance companies reneged on assurances or promises that they made to the pension fund member or insurance policyholder regarding the minimum real rate of return that they would pay on maturity, and regarding the professionalism and competencies that they would use to realise these promises.
- Insurance companies varied pension fund member and insurance policyholder contracts to worthless ones, unbeknown to the other parties to the contracts; and used the varied contracts to pay insignificant benefits.
- Transfer of pension fund member accounts from one insurance company to the other tends to ignore original benefit terms and prejudiced pension fund members
HB: Why do you think insurance companies are refusing to consider the claims?
MT: In the few cases that service providers have responded, they avoid addressing the specific basis of the ZimPIRT claim and dwell on technicalities. A typical technicality used challenges the legal standing of ZimPIRT, despite that the legal standing of ZimPIRT is clear as I highlighted in the answer to your first question.
Quite simply they cannot bear to face the specific issues raised in the pension claims submitted on behalf of our members.
The regulatory framework in Zimbabwe has allowed insurance companies in Zimbabwe to behave in a “business as usual” manner while they are potentially committing serious crimes to the public.
This may be the reason why they are not concerned about any complaints and hence claims against them
This institutional arrogance, may potentially be worsened by a seeming reluctance by media houses to report objectively and comprehensively on why pensioners, pension fund members and insurance policyholders are unhappy with benefits they were entitled to.
What it is about insurance company management and regulation that leads to this unhappiness? In so speculating about the media’s part in the suppression of this crisis, I am guided by the responsibility of the media to inform the public truthfully about the performance of their investments in insurance companies and pension funds, especially in situations where the public may be misled.
BH: Why do you think IPEC and the minister have not to date acted, considering the long period that has elapsed? What may be their motives?
MT: I have alluded to the fact that only reasonable conclusions can be made about the inaction, the one reason being that a) IPEC and the Minister of Finance are unwilling to act, or
b) IPEC and the Minister of Finance do not know how to proceed to resolve the crisis.
HB: Why is it important to resolve this crisis sooner rather than later?
MT: In the first place it is important to resolve the crisis because the owners of the funds, i.e. the pensioners, the pension fund members and the insurance policyholders now want to use their funds. It is their money.
A failure to resolve the crises and return these funds to their rightful owners will lead to dented public confidence of the insurance and pensions industries and a systematic collapse of these industries, and of the financial services sector in general. It is evident that this confidence is at its lowest.
The pension and insurance sectors are key in the executing the first three roles — any failure by the incumbent pensions and insurance business entities to execute these roles for selfish reasons would be economic sabotage. It is therefore important to come to a resolution because everyone wants the economy in this sustainable growth path.
HB: How in your opinion can a quick resolution be achieved?
MT: The first thing to do is to ensure that good corporate governance works in the insurance and pensions industries, such as to hold the Minister of Finance, IPEC and insurance companies to account in a transparent fashion. These are the entities that should drive a resolution to this crisis, if they are to perform their duties properly.
The other strategy that can help drive a quick resolution in a complementary fashion, is for the media houses to act as the voice of the voiceless pensioners, pension fund members and insurance policyholders. This will call for media governance frameworks where media houses do not lend themselves to arm-twisting by insurance companies. Several strategies can be used including the following;
a) Advertising contracts can for instance be regulated to come through only independent advertising agents,
b) The media regulator should supervise media house business coming from advertising contracts vis-a-vis newspaper sales, this to check if the advertising contracts do not compromise reporting,
c) Media houses may need to declare these advertising contracts,
d) Newspapers must be regulated not to publish misleading insurance company adverts and reports, especially intended to cover up institutional fraud and
e) Financial sector journalistic skills may need to be upgraded. With regards to the upgrading of financial sector journalistic skills, ZimPIRT and its partners have put together a fast track training programme targeted at especially scribes. This training will equip journalists with insurance and pension business performance analytic skills.
Online Reporter