ZIMBABWE’S pension regulator has given insurance companies a three-month grace period to submit compensation plans for policyholders who lost value when the country experienced its unprecedented economic implosion nearly two decades ago.
Zimbabwe abandoned its local unit for the United States dollar in 2009 after inflation officially reached 231 million percent, wiping out savings and pensions.
After the introduction of the greenback, the government in 2015 commissioned a special inquiry to investigate the impact of the currency reform on both policyholders and the economy. The inquiry was led by retired High Court Justice George Smith.
According to the Insurance and Pensions Commission (Ipec), compensation is expected to gather momentum in 2024.
“Ipec is to analyse the compensation plan and either approve or reject the proposed compensation plan (if it does not meet the expected standard) within 30 days after receiving the compensation plan (by 30 January 2024),” Ipec Commissioner Grace Muradzikwa said in a statement.
“After approval of the compensation plan, the insurer or pension fund will publish in the media, the names of the members entitled to compensation. If Ipec approves the compensation plan, the insurer or pension fund will be expected to start paying eligible policyholders or pension fund members no later than 30 days after the Ipec approval (by 2 March 2024).
“Ipec does not expect non-compliance given that we have involved the industry throughout this exercise. However, the regulations have proactively provided penalties in the unexpected event of non-compliance. We will invoke the stated provisions, should it become necessary.”
Last July, cabinet approved the compensation framework for value lost when insurance and pension values were converted from Zimbabwean dollars to United States dollars in 2009.
The government then committed to contribute US$175 million to partly cover the loss of value suffered.
During the inquiry, the commission received many complaints from members of the public, as well as from insurance and pension representative organisations.
The main concerns related to the loss of value arising from pension contribution arrears, value lost during hyperinflation, inter-generational transfer of benefits, value lost through conversions on dollarisation, forced commutations of the full pension, loss arising from de-mutualisation of Old Mutual and First Mutual and conversion of pension schemes from defined benefit funds to defined contribution funds.
The inquiry revealed complaints against the Government Pension Scheme included the absence of a funded pension scheme, outstanding one-third lumpsums for pensioners who retired just before dollarisation, delayed processing of lump sum pension benefits, delays in payment of monthly pension payouts, surviving spouses and dependents failing to access benefits, as well as the failure to access pensions by retirees of church-related hospitals and mission schools, who were not covered by the government as grant-aided workers.
Complaints relating to the National Social Security Authority (Nssa) centred on the problem of uniform and arbitrary benefit calculations, Nssa’s time limits for claiming pension benefits, the failure to access a Nssa pension by government workers on early retirement, such as former members of the police and army, lack of insurance cover for students on industrial attachment and poor record keeping. — STAFF WRITER.