Online Reporter
Rutendo Nyeve, Victoria Falls Bureau
THE Pension Fund Industry has amplified calls for collaborative reforms involving the Government, regulators, employers and industry professionals to rebuild Zimbabwe’s ailing pension system.
The sector is urging legislation of higher contribution rates of between 20 to 30 percent, prioritisation of vulnerable retirees and strategic investment frameworks to secure the future of pensioners.
This emerged during the recent 50th Annual Conference of the Zimbabwe Association of Pension Funds (ZAPF) at Elephant Hills Resort in Victoria Falls, where key stakeholders are convening under the theme: “50 Years Together, Shaping Tomorrow, Today. Building on the Past, Embracing the Future.”
The conference comes at a time when the country’s pension sector faces serious systemic challenges including value erosion, low contribution rates, poor investment returns, regulatory inefficiencies and structural weaknesses.
At the moment, the average contribution per member is a mere US$47 per month, far below the threshold required for meaningful retirement outcomes.
Speaking at the conference, First Mutual Holdings Zimbabwe’s Group Chief Actuary Mr Livingstone Magorimbo said restoring the viability of the pension sector requires a multi-pronged approach.
“We would recommend that the Government restores confidence in the financial services sector through optimal regulation and capital markets growth and control inflation to enable real returns generation from pension fund assets,” he said.
Mr Magorimbo said the Government can also partner with pension funds on Build-Operate-Transfer (BOT) projects to generate commensurate returns and introduce incentives like tax relief or Government matching for low-income earners to boost participation.
He proposed the introduction of a solidarity tax and means-tested support mechanisms to protect the most vulnerable pensioners.
“Implementation of targeted interventions, such as a solidarity tax or means-tested support for vulnerable pensioners is also critical,” said Mr Magorimbo.
He also challenged the Insurance and Pensions Commission (Ipec) to review the existing compensation framework, arguing that the current three percent return assumption is unworkable.
“There is a need for Ipec to reduce administrative burdens and expedite statutory feedback to enhance efficiency as well as promote inflation-linked instruments to protect pensioners from wealth erosion by adopting hedging mechanisms,” said Mr Magorimbo.
On the industry side, Mr Magorimbo stressed the need to increase contributions by basing them on the total cost to employer, rather than just basic salaries and to enforce timely remittances.
He advocated for diversified investment strategies, including offshore assets, real estate investment trusts (REITs), and infrastructure development to improve returns and reduce exposure to local economic volatility.
“The industry also needs to diversify investments through expanding into offshore assets, real estate (REITs), and infrastructure to mitigate risks and improve returns,” said Mr Magorimbo.
Mr Magorimbo said there is a need to merge underperforming funds to achieve economies of scale and reduce costs.
He said professionals and fund managers need to redesign pension products through introducing hybrid models like collective defined contributions to balance risk-sharing and sustainability.
Mr Magorimbo further emphasised the need to strengthen transparency, governance, and trustee accountability and to align management fees with actual asset performance.
He reiterated that a comprehensive overhaul of the country’s pension system is necessary, not only to improve sustainability, but also to ensure that retirees can live with dignity.
