NINE years ago, a nine-member board was set up to address the plight of pensioners who lost their savings during Zimbabwe's pre-2009 hyperinflationary collapse.
The Justice George Smith Commission, appointed by former president Robert Mugabe, was tasked with investigating the conversion of insurance and pension values from Zimbabwean dollars to United States dollars, establish the extend of prejudice and recommend compensation, among other mandates.
In its 2017 report, the commission attributed the loss of value in insurance and pension benefits to macroeconomic, regulatory, and institutional failures. It recommended compensating affected policyholders and pensioners using surviving assets from the hyperinflationary period, ensuring fairness and industry stability.
The commission proposed a standardised compensation framework to ensure equitable treatment for both providers and consumers. However, the Insurance and Pensions Commission (Ipec) has faced significant hurdles in rolling out the compensation process.
Recently, Ipec announced its intention to pursue legal action against 50 companies that failed to submit required plans, with only one out of 1 200 pension funds complying with the compensation regulations. Some pension funds claim they lack the granular data necessary to facilitate the compensation process, raising serious concerns about the willingness of industry players to honour their obligations.
It is alarming that, despite initiating this process in 2018, industry players have not yet resolved the data gaps, which could lead to unfair compensation for the affected pensioners.
Market analysts have also voiced concerns over the lack of transparency regarding key assumptions where data is missing. The industry's requests for extensions and permission to use estimates are unacceptable.
Ipec should not entertain such delays, as many policyholders may still possess the necessary data to ensure accurate compensation.
In addition, the industry has raised objections to some of the key assumptions underpinning the pre-2009 compensation framework, a move that could further delay disbursements. Statutory Instrument 162 of 2023 stipulates that contribution arrears must be converted using the appropriate annual average market portfolio implied rate, adjusted for the time value of money. Some industry players argue that the compensation burden unfairly targets pension funds and life insurers.
However, these concerns come at a time when the industry is grappling with a legacy issue that has severely eroded public trust. We urge the industry to demonstrate genuine commitment to addressing these matters, as restoring confidence is crucial for revitalising the sector and driving broader economic growth.
The compensation issue must be resolved urgently. Further delays will only deepen the suffering of pensioners who rightfully deserve the benefits they worked hard for. Ipec should take swift legal action against pension funds that continue to shirk their responsibilities. If necessary, Ipec should consider seizing and auctioning assets to raise funds for compensating the affected pensioners.