By Melody Chikono, in Victoria Falls
NON-resident pensioners, who worked in Zimbabwe before relocating back to their countries are owed about US1,5 million by pension funds, new data showed on Friday.
Insurance and Pensions Commission (Ipec) pensions director, Cuthbert Munjoma told Standardbusiness that the backlog dated back to 2016.
He said payments have been affected by foreign currency shortages.
Non-resident pensioners are those who would have worked in Zimbabwe in the past and are eligible for pension payouts but no longer reside in Zimbabwe.
“Ordinarily if you don’t have exchange rates arbitrage opportunities in the economy you can go with your local currency and buy foreign currency in the bank,” said Munjoma, who spoke to Standardbusiness on the sidelines of the Zimbabwe Association of Pension Funds annual conference.
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He said over 3000 non-resident pensioners had been affected.
“Previously, before we had challenges with cash shortages and parallel market exchange rates, someone who has worked in, say in a Zimbabwe mine, but is from Malawi, on retirement could go back but…(still have their) pension remitted to his home country. Unfortunately this has not been happening largely post 2016 because of foreign currency shortages.
“Now, you can’t go on the auction system and buy forex for the purposes of meeting that foreign obligation of a non- resident pensioner,” Munjoma said
“The backlog is quite significant.
“When we did an inspection it was about over 3 000 pensioners who were owed US$1.5 million. We continue to update.
“We have approached the Ministry of Finance and the Reserve Bank so that we try and establish a solution to this problem, but it remains a challenge at the moment.”
While government through the central bank started an auction system for companies to access foreign currency, pension funds are not eligible to apply for funds to settle these obligations.
Munjoma added the regulator had been seized with this issue for some time.
However, engagements with the central bank and the Ministry of Finance had not been fruitful.
He said this had dented confidence in the sector.
“It is actually a challenge that we expect with the exchange rate stability.
“That thing will have to be addressed, If you are non-resident pensioner, the situation is very precarious because you cannot convert (Zimbabwe dollars), unless if you use the benefits here or apply for commutation. Ideally the person should use the formal system not the unofficial system to convert pension proceeds to his own jurisdiction” he said.
Commutation refers to giving up part or all of the pension payable from retirement or retrenchment in exchange for an immediate lump sum. Varied factors are used to determine the amount of pension to be given up for the lump sum.