ZIMBABWE’S pension funds have failed to disburse benefits to pensioners on time, resulting in a significant increase in unclaimed benefits, according to recent data.
The total amount of unclaimed benefits rose by 62,4% to $66,6 billion in the first quarter of 2024, highlighting the need for improved efficiency in benefit disbursement.
The increase is from a 2023 comparative of $41 billion.
An unclaimed benefit, in the Zimbabwe context, refers to a pension benefit that is legally due for payment but has not been claimed by the member or beneficiary for over six months. After this period, the benefit is considered unclaimed.
Additionally, if a pension fund is dissolved according to specific legal regulations, any benefits that remain unclaimed for six months after the dissolution are also considered unclaimed.
Delaying pension benefits amid the volatile exchange rate regime erodes value and leaves beneficiaries with massive losses upon retirement.
“Unclaimed benefits for the quarter ended March 31, 2024 amounted to $66,6 billion compared to $41 billion reported as at March 31, 2023, representing a nominal increase of 62,4% and a 67,7% increase in US$ (United States dollar) terms,” Insurance and Pensions Commission (Ipec) said in its latest industry report.
“Funds are urged to ensure revaluation gains are passed to all unclaimed benefits, if they are still within the fund.
“Additionally, the total membership with unclaimed benefits decreased by 7,2% to 98 316 members, compared to 105 393 members as at March 31, 2023.”
The responsibility for a pensioner not claiming their benefit can lie with multiple parties, including pension fund administrators who may fail to communicate effectively or maintain up-to-date contact information.
Employers might also be at fault if they do not provide sufficient information or support about the claiming process.
Pensioners themselves share responsibility if they do not keep their contact details current or neglect to follow claim procedures despite available information.
However, given the robust guidelines on unclaimed benefits put forward by Ipec, pension funds are liable in not notifying or maintaining up-to-date contact information.
“Stand-alone funds had the highest amounts of unclaimed benefits, accounting for 85% of the industry total,” Ipec said.
“The age analysis revealed that unclaimed benefits over 10 years constituted 85% of the total liability.”
Ipec said as at the end of the first quarter, the total cumulative amount due to non-resident pensioners was $28,24 billion owed to 3 631 members.
“This was an increase from $0,51 billion, which was owed to 3 286 members within this category as at 31 March 2023,” Ipec said.
“In US$ terms, the amount owed to non-resident pensioners increased by 133% from the prior year. The non-resident pension emoluments continue to accumulate due to non-payment.”
News of the unclaimed benefits comes as pensioners have been complaining about paltry pension payments given the macroeconomic challenges bedevilling the nation.
In the first quarter of 2024, the commission received 57 pension-related complaints compared to 30 received in the previous quarter.
“Of all the complaints received, those relating to unpaid pension benefits were the most common, with 24 complaints during the period under review, up from 18 reported in the previous quarter,” Ipec said.
However, the commission added that notwithstanding the increase, complaints relating to unpaid pension benefits decreased from 60% of total complaints in the previous quarter to 42% of total complaints during the period under review.
“Both delay in payment of benefits and pre-2009 compensation-related complaints constituted 12% apiece of the total number of complaints received,” Ipec said.
“The ‘others’ category encompassed various cases, including cases involving low benefits in general, members requesting to be paid in US$ currency, lack of information, corporate governance issues, and full commutations.”
Ipec added: “Of the total complaints received during the first quarter, 17 complaints were successfully resolved, while the remaining 43 complaints remained outstanding.”
The commission said from the first quarter of 2023 to the fourth quarter of 2023, it had resolved a total of 92 complaints.
“The commission requests all pension stakeholders to collaborate in addressing challenges facing the industry to improve member outcomes.
“These include declining pension contributions, contribution arrears, low economies of scale due to relatively smaller pension funds,” Ipec said.
“The need to improve communication with fund members through enhanced benefit statements, conduct of annual general meetings, staff addresses, and consumer education cannot be over-emphasised.”