adminInsurance, Pension and Provident Funds has shown.
According to the report investment in shares, debentures, unit trusts and building societies contributed 38 percent of the total assets value for the industry.
This was the second highest form of investment after conversion as pension funds had invested most of their cash in stocks and unit trusts during the hyper inflationary period, to hedge for value.
Investments in fixed property contributed 40 percent of the total assets value. Fixed assets in the sector do not lose value.
“As such even after conversion fixed assets such as buildings did not lose much value and therefore contributing greatly to the total value,” said Commissioner Mannet Mpofu in her report to Finance Minister Tendai Biti.
About US$200 million was invested in assets outside Zimbabwe also as a way of hedging for value. A pension plan is a qualified retirement plan set up by a corporation, labour union, Government or other organisation for employees.
The primary objective of pension funds is to accumulate assets from contributions and investments income to satisfy all pension obligations of the contributor on a timely basis.
Many employees, both in the public and private sector, had their pension savings heavily eroded by inflation. This left them with a double barrel problem in that they struggled and toiled during their working days only to encounter the same fate when they opted for early or due retirement.
Zimbabwe has more than 2 900 pension funds although some of the companies are dormant, after failing to honour payment of pension contributions.
After the conversion of pensions in 2009, 232 646 members out of the 886 890 members deferred, representing 26 percent of the total membership.
In 2009 alone, total benefits were US$78 million benefiting 67 587 people, representing 8 percent of the total membership, with only 32 883 being former members. The difference was shared between widows and others.
Contributions in 2009 were US$153 million, 36 percent contributed by members and employers contributed the remainder.
The introduction of the multiple currency regime in 2009, which brought a cash crunch in the economy, saw a sizeable number of pension funds having little cash for day to day activities.
The process, carried out by actuaries, saw most pension fund values starting from very low bases and in some instances zero values, as a result of ravaging inflation.
“After the conversion, pension funds informed their members of their low or nil capital values,” said Mrs Mpofu. “This generated a new scenario which saw some members opting to commute their pensions in full. Some pensioners walked away with peanuts.”
The pension industry is expected to rebound as more companies revive after dollarisation policies.
Online Reporter