Online Reporter
Oliver Kazunga-Senior Reporter
Government has released US$5 million for pre-2009 value-loss pension compensation to former pensioners, with payments already made under two approved pension schemes as efforts gather pace to conclude the long-awaited exercise.
During the hyperinflationary period up to February 2009, the value of most pension contributions and savings (including insurance and pension policies) was extensively eroded.
The Justice Smith Commission of Inquiry, which was appointed by the Government in 2015 to probe the conversion process, blamed the value loss largely on poor regulatory enforcement and a flawed demonetisation process for the local currency following the switch to a US dollar-dominated multicurrency regime.
The commission concluded that policyholders and pensioners suffered huge losses owing to the failure of the Government, the Insurance and Pensions Commission (IPEC) and industry players to establish a fair and equitable process for converting insurance and pension values from Zimbabwe dollars to US dollars.
In his presentation at the inaugural Regulators Forum organised by the Consumer Protection Commission (CPC) in Harare this week, IPEC Manager for Market Conduct and Supervision Mr Elliot Tsuro said the Government had set aside US$75 million for the compensation exercise.
“So, in terms of the compensation exercise, the Government allocated US$75 million towards the compensation exercise — and so far, US$5 million has been spent towards that cause.
“And out of all the pension fund schemes, two have been approved; disbursements have already been made to policyholders,” he said.
To accelerate the compensation programme, the Government is amending Statutory Instrument 162 of 2023, which is presently before the Attorney-General’s Office, to address one of the biggest challenges slowing the process — incomplete or missing pension records.
The pre-2009 compensation framework is outlined in SI 162 of 2023 (Compensation for Loss of Pre-2009 Value of Pension Benefits Regulations), which came into effect on 1 October.
Under these regulations, pension funds and life assurers were required to submit compensation plans within 90 days of the effective date.
IPEC would then approve the plans within 30 days, provided they met the necessary standards.
According to these timelines, compensation should have commenced by the beginning of the second quarter of 2024.
However, Mr Tsuro said many industry submissions had failed to meet the specified criteria, and one of the primary reasons for the delay was that some pension funds no longer had adequate members’ records, making it difficult to accurately identify beneficiaries and allocate assets for distribution.
“One of the sticking issues in terms of compensation is the issue of the database. Some pension funds no longer have data for their pensioners, so they cannot prepare the figures required to allocate assets for distribution to their members,” he said.
It is believed that the proposed amendments to SI 162 of 2023 will provide a framework for resolving the database gaps that have affected several pension funds.
The compensation programme forms part of broader Government efforts to restore confidence in Zimbabwe’s pensions industry while strengthening consumer protection and improving oversight of financial institutions.
