Source: Editorial Comment: Pensions should be hedged against inflation | The Herald November 15, 2019
Thousands of pensioners countrywide are living in poverty after the value of their pensions accumulated over the years was eroded by inflation.
Most pensioners receive paltry monthly payouts, which are too little to live on.
Those who yearned for comfort in retirement, have been dealt a blow because their payouts can no longer guarantee their next meal.
This is indeed worrisome, with the Government calling for redress to the pensioners’ plight.
It is against this background that we welcome the decision by the National Social Security Authority (NSSA) to increase pension payouts from $80 to $200 per month.
Workers’ compensation scheme minimum pensions also went up to $2 000 from $300.
The increases come barely six months after NSSA, in consultation with Public Service, Labour and Social Welfare Minister, awarded pensioners a once-off discretionary bonus equivalent to a month’s payout to cushion them.
While we appreciate NSSA’s efforts to ease the plight of pensioners, we feel pension funds should offer long-term solutions to challenges faced by pensioners.
Of course, we do not expect NSSA to make inflation-adjusted monthly payments, lest the scheme collapses.
But NSSA should ensure the payouts are reasonable to make pensioners afford basics like medication, considering that advanced age brings with it a fair share of challenges.
There is need for an objective look into payouts being made to pensioners because the new adjustments are already falling short.
At a time when most employers are unable to pay inflation-adjusted salaries, pension funds must consider giving contributors early access to their benefits.
That will help people to plan for retirement by investing in other portfolios.
Already, thousands of workers face a bleak future, amid indications that their pension contributions have been eroded.
How can the country guarantee compliance to public pension contributions when those due for a payout are getting a pittance?
Value erosion has put a dent on pension contributions of most employees, putting to waste years of contribution.
Challenges facing pensioners today are similar to those witnessed between 2007 and 2008.
During that time, hyperinflation which saw pensioners’ years of sweat and contributions turning into nothing.
With the majority of them now senior citizens, pensioners deserve respect. They cannot continue wallowing in poverty. We urge pension funds to hedge their schemes against inflation.
The nation requires good corporate governance in institutions that manage pensions.
Some institutions are already facing allegations of poor corporate governance, arbitrary benefit calculations, shambolic record-keeping, including unsustainable and unjustifiable expenses.
We urge the Government to investigate pension funds to ensure that pensioners are not prejudiced.
Government is already seized with the matter following its decision to come up with legislative and supervisory reforms to ease the plight of pensioners.
The Insurance and Pensions Commission Act, the Insurance Act and the Pension and Provident Funds Act are some of the existing legal instruments that the Government has put in place to protect pensioners from further losses.
Such initiatives will not only focus on the current pensioners, but will also seek to redress some of the challenges in retrospect.
Pensioners and policyholders who lost their savings when the country switched from the Zimbabwe dollar to the multi-currency system in 2009, could soon receive compensation as pension and insurance companies, have begun submitting compensation plans to the industry regulator — the Insurance and Pension Commission.