Online Reporter
Rutendo Nyeve, [email protected]
MORE than ZWG500 million has to date been disbursed by the Treasury towards pre-2009 loss of value compensation for public pensioners, while ZWG10 million has been channelled to the Insurance and Pensions Commission (Ipec) for private pensioners.
Deputy Minister of Finance, Economic Development and Investment Promotion, David Mnangagwa, revealed this at the National Assembly on Wednesday, underscoring Government’s commitment to addressing one of the country’s most protracted financial grievances.
The pre-2009 loss of value occurred during the hyperinflationary period that culminated in the 2009 currency reforms, when pensioners and policyholders saw their lifetime savings and pension benefits wiped out as Zimbabwe abandoned the local currency for a multi-currency system dominated by the United States dollar.
The Justice Smith Commission of Inquiry, appointed in 2015 to investigate the conversion process, found that policyholders and pension scheme members were materially prejudiced and recommended compensation.
Deputy Minister Mnangagwa presented the compensation update.
“The Ministry of Finance, through the Public Service Commission, to date has disbursed more than ZWG 500 million towards the pre-2009 loss of value compensation for public pensioners. In respect of private pensioners, Statutory Instrument 162 of 2023 gazetted provides for the methodology for computing and disbursing compensation across the pension industry,” he said.
Deputy Minister Mnangagwa acknowledged that progress on private sector compensation has been constrained by significant data gaps at pension funds and insurers.
“To address these constraints, S.I. 162 of 2023 is being amended by the Attorney General’s Office to allow for a smooth compensation process for private sector pensioners. In respect of the
Government’s compensation to private pensioners, Treasury has to date disbursed ZWG10 million to Ipec towards private pensioners,” he said.
The disbursements come as Government seeks to restore confidence in the pensions industry, which has suffered reputational damage following the value erosion.
The compensation exercise is viewed as critical to encouraging long-term savings and rebuilding trust in financial institutions.
Deputy Minister Mnangagwa also provided an update on the 2019 pay compensation, saying Government allocated shareholding valued at US$75 million in Kuvimba Mining House in 2021 towards compensating the pensions industry for losses incurred during the 2019 currency reforms.
“In 2021, an initial dividend of 400 000 was received and distributed to 3 873 qualifying pensioners following a means test assessment whilst a further 400 000 was disbursed to depositors,” he said.
Furthermore, the Mutapa Fund distributed a dividend of US$1,75 million each to Ipec and the Deposit Protection Corporation towards compensation of pensioners and depositors under the programme.
The IPEC allocation is expected to benefit up to 8 500 pensioners. The pre-2009 compensation framework is outlined in Statutory Instrument 162 of 2023, which came into effect in October 2023.
Under the regulations, pension funds and life assurers were required to submit compensation plans to IPEC for approval. However, many submissions failed to meet the required standards, primarily due to inadequate member records.
The proposed amendments to S.I. 162 of 2023 are expected to provide a framework for resolving database gaps that have hampered several pension funds, paving the way for accelerated disbursements to private pensioners.
