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Natasha Chamba, Business Reporter
THE Insurance and Pensions Commission (IPEC) has allayed fears that the value of pensions would be eroded by the recent liberalisation of the foreign currency exchange market.
The introduction of the inter-bank forex exchange by the Reserve Bank of Zimbabwe (RBZ) in February has already seen the exchange rate spiking 1:2,9 between the USD and the RTGS dollar with parallel market rates hitting 1:4,5 or more.
In emailed responses IPEC acting commissioner, Mr Blessmore Kazengura said the floating of the exchange rate would result in an upward review of pension benefits.
“The floating of the rate by the RBZ means that some pension fund assets will go up in RTGS dollar terms, which will result in corresponding upward review of the liabilities (benefits pensioners will get) in RTGS value,” he said.
“What is also critical is a stable economic environment with low inflation to guarantee preservation of value. As the pensions regulator we find comfort in that the Government is actively pursuing policies that seek to stimulate the economy and contain inflation. Central bank Governor, Dr John Mangudya has said the central bank will ensure pension savings are protected.”
Mr Kazengura said following the introduction of the inter-bank exchange system, IPEC had already communicated with the insurance and pensions industry that re-evaluation of assets correspondingly should lead to revaluation of benefits to clients.
He said a taskforce comprising of IPEC, RBZ, and Actuarial Society of Zimbabwe among other stakeholders, had been setup to access the impact of the monetary policy statement and make recommendations on measures to put in place to preserve pension values.
“In terms of our long-term planning, given the lessons learnt from the loss of value experienced on adoption of the multi-currency regime in 2009, some reforms and recommendations to preserve value have been incorporated into the draft, Pension and Provident Funds Bill,” he said.
“We expect the Bill to be presented in Parliament in due course once all other processes have been addressed.”
IPEC has also encouraged industries to make investments that preserve value with Mr Kazengura saying industries should look into alternative investments, which preserve value and offer higher returns than the traditional investments.—@queentauruszw
Online Reporter