THE Insurance and Pensions Commission (Ipec) says it will toughen its stance against industry players after one out of 1 200 pension funds that submitted plans had met its compensation scheme requirements.
Ipec is taking 50 pension funds to court, commissioner Grace Muradzikwa said at the industry regulator’s annual general meeting held in Harare last week.
The commission last year directed insurers and pension funds to submit compensation schemes as an update for review and approval by December 31, 2023.
Effectively, they were given 90 days to compute the compensation schemes, a process meant to pave the way to compensate for losses incurred on insurance and pension policies in 2009, following hyperinflation.
The industry has been battling with this process since 2017 with Statutory Instrument (SI) 162 of 2023 instructing pension funds to compensate for the 2009 hyperinflation losses.
“We had one month to review these compensation schemes. We received and reviewed 1 200 compensation schemes, against the expected 1 264 compensation schemes. So, 95% of the expected submissions came in and we were able to review all of them,” Muradzikwa said.
“But, only one pension fund met all the requirements and has been approved, with several others, a few others almost complying. Let me speak to some of the challenges that we had. So I’m often asked, especially by reporters and also by pensioners, why is it that up to now we have not yet received anything from pre-2009?
She said the delay was due to it being a compensation exercise.
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“And we really need the understanding of pensioners to make sure that we do this right. So, one of the considerations for our team is that there was a lack of granular data. The industry did not have data on the pensioners who are contributing,” Muradzikwa said.
“So, we are at a stage where we are saying do we assess these compensation schemes in line with the law, which is SI 162, or do we allow for practicality? Allow for the pension funds to exercise judgement to do estimates so that we move forward with this exercise?”
She said the reports received were highly summarised and did not allow for Ipec’s team to be able to carry out the necessary views that they needed to do.
“There was also a lack of disclosure of actuarial assumptions when data is missing. And also, failure to demonstrate asset separation pre-2009. So, the possible implications of the results when professional judgment was applied is that these are considered the risks,” Muradzikwa said.
“We are engaging with the pension funds; various stakeholders so that we can find a way forward.”
She said the commission was also insisting on enforcement of the pension regulations, saying it felt that only in this way would the pensioners be compensated.
Muradzikwa asked for patience as the commission engaged players to map a way forward.
“We need to make sure that pensioners are compensated. We also have few pension funds, about 50 funds, who did not submit any compensation schemes, and I’m sure some of you have read that we started taking them to court,” she said.
“The SI allows us to take those pension schemes that do not submit to court, so we have done that and started the process.”
