Online Reporter
Rutendo Nyeve, Sunday News Reporter
TREASURY has so far disbursed ZiG515,1 million towards compensation for public pensioners affected by the pre-2009 loss of value, while a further ZiG10 million has been channelled towards the Insurance and Pensions Commission (IPEC) for compensation of private pensioners.
The payments were disclosed in the National Assembly on Wednesday as Government moves to address one of Zimbabwe’s longest-running pension grievances arising from the collapse in the value of savings and pension benefits during the country’s hyperinflationary period.
Deputy Minister of Finance, Economic Development and Investment Promotion David Mnangagwa said Government remained committed to implementing the compensation measures, although the private pension sector continues to face challenges in verifying records and calculating individual losses.
The pre-2009 loss of value dates back to the hyperinflationary crisis that culminated in the abandonment of the Zimbabwe dollar in 2009 and the adoption of a multi-currency system largely dominated by the United States dollar.
During the crisis, pension savings and insurance benefits lost substantial value, leaving thousands of policyholders and pension scheme members with benefits that were significantly below the value they had expected to receive.
The Justice Smith Commission of Inquiry, appointed in 2015 to investigate the conversion of pension and insurance values during the period, found that policyholders and pension scheme members had been materially prejudiced and recommended measures to compensate affected beneficiaries.
Giving an update in Parliament, Deputy Minister Mnangagwa said the Ministry of Finance, through the Public Service Commission, had so far paid out ZiG515,112,132 towards compensation for public pensioners.
For private pensioners, the process has been more complicated, with Government citing gaps in historical records held by pension funds and insurers.
“In respect of private pensioners, Statutory Instrument 162 of 2023 gazetted provides for the methodology for computing and disbursing compensation across the pension industry,” said Deputy Minister Mnangagwa.
He said the Attorney-General’s Office was working on amendments to the regulations to address challenges that have slowed the compensation process.
“To address these constraints, SI 162 of 2023 is being amended by the Attorney General’s Office to allow for a smooth compensation process of private sector pensioners.
“In respect of the Government’s compensation to private pensioners, Treasury has to date disbursed ZiG10 million to IPEC towards private pensioners,” said Deputy Minister Mnangagwa.
SI 162 of 2023, which came into effect in October 2023, established the framework for calculating and compensating affected private-sector pensioners and policyholders.
Under the regulations, pension funds and life assurers are required to submit compensation plans to IPEC for approval before payments can be made.
However, a number of submissions have reportedly fallen short of the required standards, largely because of incomplete or inadequate historical member records.
The proposed amendments are therefore expected to provide a mechanism for dealing with database gaps and other administrative challenges that have prevented some pension funds from finalising compensation plans.
The issue is significant for Zimbabwe’s pensions industry, where prolonged value erosion has affected public confidence in long-term savings and retirement planning.
Government has previously said compensation is part of wider efforts to rebuild confidence in the pensions and insurance sector and restore the value of benefits owed to affected beneficiaries.
Deputy Minister Mnangagwa also gave an update on compensation relating to the 2019 currency reforms, when another major loss of value affected pensioners and depositors.
He said Government in 2021 allocated US$75 million worth of shareholding in Kuvimba Mining
House 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.
Under the same programme, the Mutapa Investment Fund subsequently distributed US$1,75 million each to IPEC and the Deposit Protection Corporation for compensation of pensioners and depositors.
The IPEC allocation is expected to benefit up to 8 500 pensioners.
The latest disbursements come against the background of repeated efforts by Government and regulators to address losses suffered by pensioners during successive currency and economic crises.
Blessing Chizhande