Chronicle Editor
Michael Magoronga, Midlands Correspondent
THE Pensions and Provident Fund Bill, which is before Parliament, will criminalise and hold accountable finance directors and company executives for non-remittance of pension contributions.
The proposed legislation is expected to restore sanity in the sector where some employers receive pension contributions but fail to remit them.
The new Bill also seeks to tighten enforcement of compensation of pensioners after most workers lost their savings following demonetisation of the Zimbabwean dollar in 2009.
Insurance and Pensions Commission (IPEC) director in charge of pensions, Mr Cuthbert Munjoma, explained how the new Bill will compel company managers to directly account for the non-remittance of pension funds. “The pension contribution arrears have been a problem especially prior to 2009. This is largely attributed to viability challenges facing sponsoring employers. But our regulatory view is that the moment money is deducted from the payslip, that money should be remitted to the pension fund otherwise that would prejudice pension scheme members,” said Mr Munjoma.
He said some employers have gone for more than 15 years without remitting the pensions.
“We have noted in some instances where contributions have not been remitted for periods up to 10 to 15 years of which we believe will prejudice pensioners.
“The Bill, therefore, is expected to foster better corporate governance practices within the industry while adequately providing the legal basis for a troubled entities’ resolution framework as well as increasing the commission’s enforcement powers,” said Mr Munjoma.
“The Bill before Parliament is going to enhance provisions to do with contribution arrears. It’s going to place personal liability on finance directors of sponsoring companies and the company itself for non-remittance.”
Should one fail to remit, Mr Munjoma said personal liability of top executives implies criminal penalties.
He, however, said some employers were now forthcoming as they are entering into payment agreements so that they clear the arrears.
“We have some companies especially those that are facing viability challenges including parastatals and Government departments. We will continue working with other ministries to ensure that those arrears are cleared,” said Mr. Munjoma.
The commission has also raised concern over unclaimed pension benefits, which have ballooned to about $600 million.
“We are assessing root causes as to why the benefits are lying idle. We discovered that migration and lack of data integrity are chief causes,” said Mr Munjoma.
“We are, therefore, revamping our reporting templates. The industry has to keep records in a format that will enable tracking of beneficiaries.
“We have a number of initiatives that we are implementing and we believe we are on top of the situation,” he added.
The measures are part of the legal reforms that are being implemented in a bid to bring sanity to the insurance and pension sector.
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