Tawanda Musarurwa
Zimbabwe’s US$3,47 billion pensions industry is entering its most significant regulatory overhaul in years as the Insurance and Pensions Commission (IPEC) consolidates the rulebook, automates supervision, establishes a member safety net and scrutinises fund administrators’ persistent losses.
Speaking at the 7th Zimbabwe Association of Pension Funds (ZAPF) Principal Officers and Chairmen’s Convention, IPEC director of pensions and life insurance supervision Mr Cuthbert Munjoma outlined the regulatory roadmap.
The Pension and Provident Funds Regulations, gazetted under Statutory Instrument 151 of 2026, largely incorporate provisions previously issued via circulars and directives.
IPEC will shortly publish a circular identifying redundant instruments. For instance, the new regulations now embed the registration provisions for the Micropension Framework directly.
Pension funds have until December 31 to submit redrafted rules. Existing registered rules remain valid in the interim to ensure benefit administration is not interrupted, with IPEC offering flexibility on a case-by-case basis.
However, Mr Munjoma cautioned that rules non-compliant in substance — spanning vesting, preservation, benefit computation, governance, or expense treatment — will be rejected regardless of historical precedent.
Market structure dominated the convention’s debate. Since 2020, 27 companies have delisted from the Zimbabwe Stock Exchange (ZSE), with 13 relisting on the Victoria Falls Stock Exchange (VFEX) and the remainder going private.
This shift accelerated in the second quarter when Econet Wireless Zimbabwe migrated to the VFEX, reducing the ZSE’s market capitalisation to ZiG85,5 billion in April.
Consequently, the VFEX — valued at approximately US$3,91 billion — surpassed the ZSE as the country’s largest equity market.
When a company delists, pension fund holdings automatically reclassify from quoted to private equity. Mr Munjoma categorised the resulting breach of the 15 percent private equity cap as involuntary rather than prudential, but stressed it does not waive statutory compliance duties.
To address this, IPEC is granting a compliance grace period of up to two years, excluding or discounting legacy exposures to prevent forced fire sales.
Furthermore, IPEC is collaborating with the Reserve Bank of Zimbabwe and the Securities and Exchange Commission to issue joint guidelines requiring independent fair valuations of private equity investments.
The regulator is also advocating for minimum notice periods ahead of delistings and clear exit options for minority shareholders.
Addressing industry calls to raise the private equity ceiling to 20 percent, Mr Munjoma noted that average fund exposure sits at just 6 percent.
Any cap revision will depend on empirical performance data from current allocations. According to IPEC’s second quarter data, unquoted equities rose 13 percent to reach US$211,85 million.
The IPEC Amendment Act establishes a Policyholder Protection Fund as a safety net for regulated entity failures.
Designed as an autonomous statutory body overseen by a board of up to eight ministerial appointees and chaired by an independent member, the fund will be built gradually.
A flat contribution levy will apply from 2027 to 2029 before transitioning to risk-based rates in 2030.
Proposed initial rates include: life and short-term insurers: 0,20 percent of gross written premiums; funeral assurers: 0,15 percent of gross written premiums; pension funds: 0,05 percent of annual contributions.
IPEC is reviewing potential offsets and phasing mechanisms to avoid eroding member benefits. Once established, the fund will also absorb unclaimed benefits older than five years, which stood at
US$20,15 million across 250 471 members in the second quarter.
IPEC’s planned Electronic Supervisory System is nearing procurement completion. The system will automate fund registrations, returns analysis, risk ratings, and off-site supervision.
While a separate shared information communication technology platform for funds remains in the design phase—a process that has taken three to five years in other jurisdictions — Mr Munjoma urged funds to prioritize data integrity.
Standardising member records, contribution histories, and arrears schedules is essential, as digital supervision will immediately surface underlying data weaknesses.
The sharpest discourse focused on fund administrator losses. IPEC’s Q2 report highlighted a combined loss of US$11,28 million among administrators, fully accounted for by Old Mutual, Zimnat and ZB Life. While administrators attribute losses to the fee-capping Expenses Framework, Mr Munjoma pointed to inflated internal cost structures.
Employment costs consume 47 percent of overall expenses (35 percent in salaries and 12 percent in staff benefits), compared to just 8 percent spent on computer hardware.
Additionally, contribution arrears —which surged 22 percent to US$181,78 million — depress administrator fee income, as fees are calculated strictly on contributions received.
“Our view is that the life companies should align the expense structures to the level of income they are receiving from pension funds,” Mr Munjoma stated, questioning how shared group services (HR, IT, and finance) are allocated to employee benefits divisions.
Despite administrator losses, parent life companies remain profitable, helping drive the life assurance sector to a pre-tax profit of US$78,54 million in the first half of the year. Mr Munjoma warned that if losses persist, market consolidation may be necessary to eliminate excess administrative capacity.
He concluded by urging fund chairpersons to track the protection fund levy, maintain internal asset registers, enforce compliance with S.I. 151, respond to the draft service-provider rotation framework, and rigorously monitor pension payouts.
