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Acting Business Editor
THE government has expressed concern over the pension contribution arrears that have ballooned to $152 million accrued mainly by parastatals and local authorities.Presenting the 2014 national budget recently, Finance and Economic Development Minister Patrick Chinamasa said the arrears were largely arising from high contribution rates of up to 30 percent.
He added that the growth in the arrears was also driven by the absence of a policy framework defining benefits and contribution structures for parastatals and local authorities pension scheme.
“Government is concerned with pension contribution arrears mostly being accrued by parastatals and local authorities currently amounting to $152 million.
“These arrears are mainly arising from factors such as high contribution rates of up to 30 percent, absence of a policy framework, poor corporate governance and accountability on these contributory institutions, which has seen some of the executives awarding themselves hefty salaries and allowances and making deductions while failing to remit pension contributions to their funds,” he said.
Defaulting parastatals and local authorities were encouraged to make good their pension arrears. In this light, the Insurance and Pensions Commission is expected to come up with a policy framework that defines benefits, contributions, structures and governance of pension funds in local authorities and parastatals.
Taking cognisance of the insurance and pensions industry’s potential, concerns such as negative public perception following values lost during the hyper-inflationary period, poor corporate governance in some institutions, and low pension payouts and outdated legislation need to be addressed.
Meanwhile, the insurance and pension industry total assets grew by about 20 percent from $2,99 billion in December 2012 to $3,6 billion as at September 30, 2013. The growth was largely driven by life assurance and pension funds.
Online Reporter