Nearly half of Zim’s pension funds earmarked for dissolution, regulator says

Business Writer

Nearly 40 percent of pension funds in Zimbabwe were earmarked for dissolution by the end of the first quarter to March 31, 2024, latest figures from the regulator the Insurance and Pension Commission show.

According to the Insurance and Pension Commission (IPEC), the pensions industry was composed of 966 registered occupational pension funds as at March 31, 2024 compared to 978 funds in March 2023.

The decrease was mainly a result of finalised fund dissolutions and the consolidation of small funds into existing umbrella funds, the regulator said.

It said of the 966 registered funds, 481 were active, constituting 49.79 percent of the industry’s funds while the remaining 485 were inactive.

“Out of the 485 inactive funds, 372 of them were earmarked for dissolution,” reads part of the pensions report for the quarter ended March 31, 2024.

Of the 372, 15 of them had concluded during the period under review.

An asset manager who spoke of record said some of the funds are dissolving because the employer company would have closed.

“Once the sponsoring company is closed then value loss wont be avoided,” he said.

“Most funds tend to belong to defunct sponsor companies.”

Meanwhile, IPEC has put the dissolutions on hold pending the conclusion of the pre-2009 compensation to ensure fairness among members.

This suggests some pension funds were now using the dissolution route to escape conditions set for the pre-2009 compensation scheme.

The regulator has initiated legal action against approximately 50 pension funds for failing to submit their proposed pre-2009 compensation schemes.

The criminal proceedings against non-compliant entities were in accordance with Statutory Instrument (SI) 162 of 2023.

“We are taking legal action against about 50 pension funds that have not submitted at all and it will be up to the courts (to make a determination),” said IPEC commissioner, Dr Grace Muradzikwa.

IPEC had initially targeted the first quarter of this year to begin compensation payouts.

“It is highly technical and it has been difficult to unlock the value,” she said.

Out of the accessed schemes, only Mimosa Pension Fund has been approved, with the rest going back to the drawing board.