HARARE – A commission of inquiry set up to probe the process used to convert pensions and insurance benefits following dollarisation of the economy in 2009 has come up with a conversion ratio from Zimdollar to US dollars.
The nine-member commission chaired by retired judge Justice George Smith was set up after many Zimbabweans who saved for their old age were offered meagre sums as low as US$6 for their life savings and pensions by the country’s bankrupt government.
Zimbabwe’s central bank had paid the meagre amounts to all those who held Zimbabwe dollar bank accounts and pensions when it abandoned its domestic currency in 2009.
The commission has produced a 423-page report for pensions held by March 31, 2009.
The report released in yesterday’s Government Gazette revealed a huge loss of value to insurance and policy holders.
The commission raised alarm over failure by government and industry to set up a fair and equitable process of converting insurance and pension values from the Zimbabwe dollar to the US dollar.
It proposed that pension member values be determined at US$1 = Z$13 805 813,48.
“The commission found that the insurance and pension industry did not only lose value during the conversion period alone but have been losing value through the investigation period due to reasons that include poor cooperate governance, arbitrary benefit calculations, shambolic record keeping, weak legislation and unsustainable expense ratios, among other social ills,” reads the commission’s report.
Other reasons for loss of value include an absence of a resolution framework for failed pension funds as well as general macro-economic instability during 1998 to 2008.
“The commission found that the insurance and pension industry was not being effectively regulated over the investigation period of 1996 to 2014.
“As a result the regulator failed to intervene effectively to correct market failures and guide the industry when required.
“This led to the industry failing to institute and follow sound systems and procedures,” the report reads.
“The commission also noted failures on the part of government in particular the absence of clear policy guidelines relating to currency-de-basing, the de-monetisation and conversion processes as well as the operating environment that was characterised by prolonged inflation.
“In the absence of such essential guidance from the regulator and government and the face of an unstable macro-economic environment, the interest of policy holders and pension fund members were not protected.
“The industry players trampled on the reasonable benefit expectations of its customers leading to loss of value.”