A NEW Insurance and Pension Commission (Ipec) report shows that more than 40% of the country’s pension funds are inactive as local firms struggle to remit contributions.
According to the pension industry report for the third quarter ending 31 March, there were 978 registered occupational pension funds as at 31 March 2023 compared to 984 funds as at 31 March 2022.
“The decline was due to a decrease of 18 funds as a result of transfers, mergers, dissolutions and the exclusion of funds, which had previously been double counted as a result of dual reporting while on the other hand 11 new funds were registered,” the report reads.
“Of the 978 funds, 552 were active, accounting for 56% of the industry’s funds. The remaining 426 funds were inactive as they were either paid up or undergoing dissolution. In addition, 39 pension funds were defined benefit schemes whilst the remainder were defined contribution schemes.”
The report shows that only 14 of the 978 registered funds conduct their own in-house fund administration business. The remainder, which are insured and self-administered funds, outsource the services to fund administrators.
There were 13 fund administrators registered with Ipec as at 31 March 2023. Five of the 13 administrators were independent administrators, while the remaining eight were registered life assurance companies conducting fund administration business.
“The commission calls upon the boards of funds to follow up with sponsoring employers to ensure that contributions are timeously remitted to the funds to avoid the prejudice on fund members. Furthermore, it is crucial for the sponsoring employers to remit contributions in time to avoid their accounts being garnished by the regulator,” the report reads.
The total income for the period under review, the report shows, was ZW$387 billion compared to ZW$136 billion for the same period during the previous year. Of the ZW$387 billion, total income earned in foreign currency was US$5.2 million, which is equivalent to ZW$3.5 billion, thus constituting 1% of the industry’s total income.
Total expenditure for the period under review was ZW$28 billion.
Of that amount, ZW$21 billion, which was 75% of expenses went towards the core mandate of paying benefits to members.
Total administrative expenses incurred were ZW$7 billion and were mainly driven by administration fees, asset management fees and staff costs, which constituted 71.49% of the administration expenses.–STAFF WRITER.
