Source: IPEC mulls new pre-2009 value loss compensation plan – herald
Tawanda Musarurwa
IMPLEMENTATION of the pre-2009 insurance and pension value loss compensation framework is set to gain momentum as the Insurance and Pensions Commission pushes for the amendment of Statutory Instrument 162 of 2023.
Zimbabwe is compensating individuals for the loss of value of insurance and pension policies following the 2009 shift to a multicurrency regime, formalised under Statutory Instrument 162 of 2023.
The Government promulgated SI-162 (Compensation for Loss of Pre-2009 Value of Pension Benefits Regulations) in October 2023 to effect the compensation.
According to the timelines indicated in the SI, compensations should have commenced within the first quarter of 2024.
However, the compensation programme has largely stalled, with IPEC having approved just two compensation schemes, namely Mimosa and Amzim (which are both in the mining sector).
Many funds have data gaps, and there are funding shortfalls, leading to the need for amendments to the regulations to accelerate the process.
The Government has allocated US$25 million to assist with compensating civil servants affected by the erosion.
In an interview on the sidelines of the ongoing Insurance and Pensions Symposium in Victoria Falls, IPEC Commissioner Dr Grace Muradzikwa said SI-162 will be amended.
“The pre-2009 compensation has been, unfortunately, protracted.
“But, I’m pleased to say we are at a stage where we have had a lot of consultation with the industry and we would like to amend the SI-162 of 2023 so that we can approve more compensation schemes,” said Dr Muradzikwa.
One of the key issues that has delayed the approval of most compensation schemes is the unavailability of granular data on the part of pension funds..
“The challenge is on the availability of (pensioners’) data. You find out that most of the pension funds have not been able to comply with SI-162 in its current form.
“So, the revisions will actually assist in making sure that we are able to approve more compensation schemes,” added the IPEC Commissioner.
The revisions are expected to allow the regulator to use alternative sources of data.
The Government, which committed US$175 million towards the compensation programme in 2022, has reaffirmed its commitment to bring finalisation to the issue.
Deputy Minister of Finance, Economic Development and Investment Promotion Kuda Mnangagwa, said:
“The completion of this process is explicitly among the Government’s priority targets for restoring confidence in the insurance and pensions sector.
“Government is ready to facilitate, support and provide the enabling policy framework.”
SI-162 requires very specific data on pension funds’ active members, active pensioners, deferred pensioners, suspended pensioners, beneficiaries, members or beneficiaries who exited the fund through death or other means, because these are all entitled to compensation if the schemes were defined contribution (DC) schemes.
For defined benefit (DB) funds, only members who exited during the investigative period will be compensated.
As at the end of last year, of the 971 registered occupational pension funds, there were 934 DC schemes and 34 DB funds.
According to section 4 of SI-162 of 2023, basic data that all pension fund compensation schemes should include: “an actuarial report clearly showing the cohorts of members to be compensated, the compensation amount per cohort, methodology, any assumptions made and the proposed sources of funding of the prejudice suffered by affected members; and a detailed schedule of affected members showing their respective compensation payouts.
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