THE Insurance and Pensions Commission (Ipec) has demanded that company boards put in place measures to ensure employers remit contributions to pension schemes, after it emerged that parastatals and local authorities are now recurrent defaulters despite deducting instalments from workers.
NATHAN GUMA
Ipec has published the top 50 defaulters as at 31 December 2023, with parastatals once again having the largest outstanding remittances, on a list dominated by local authorities.
“Employers that deduct pension contributions are required in terms of section 16 (3) of the Pensions and Provident Funds Act [Chapter 24:32], to pay contributions to the pension fund not later than 14 days after the end of the month in which the contribution is payable,” Ipec said in a statement.
“Ipec calls upon Members of Boards of the affected pension funds to put measures in place to ensure the defaulting employers remit outstanding contributions, for the benefit of their pension scheme members. In addition, labour organisations are urged to engage the employers who are not remitting pension contributions to protect members against old age poverty.
“Following gazzetting of the new Pensions and Provident Funds Act [Chapter 24:32] into law in September 2022, employers and Members of Boards are urged to familiarise themselves with the deterrent provisions of the new Act regarding pension contributions.”
In an interview with The NewsHawks, Ipec public relations manager Lloyd Gumbo said while the companies were deducting instalments from workers, they have not been remitting them to their respective pension funds, endangering employee savings.
The new statistics show that the Zimbabwe Electricity Transmission and Distribution Company (Zetdc) has the highest outstanding remittances of ZW$65 708 285 876, while the Zimbabwe Power Company (ZPC) and Zimbabwe Electricity Supply Authority have ZW$26 670 940 729 and ZW$10 724 900 330 respectively.
Parastatals topped the list in the year ending 2022. Other highest defaulters include Freda Rebecca Gold Mine with arrears of ZW$7 519 530 287, Zesa Enterprises ZW$7 252 494 960, Zesa Executive ZW$6 472 484 431 and Shamva Gold Mine US$5 881 172 959.
The Rainbow Towers Group (RTG) has an outstanding contribution of ZW$5 058 849 925, while the National Railways of Zimbabwe (NRZ) has ZW$4 200 446 562. Other parastatals, the Zimbabwe National Water Authority (Zinwa) and Zupco also have hefty arrears of ZW$2 902 714 276 and ZW$1 566 217 306 while the Civil Aviation Authority of Zimbabwe (CAAZ) has an outstanding ZW$3 605 564 384.
Local authorities have relatively less remittances, with Zibagwe Rural District Council’s arrears pegged at ZW$394 535 876, while Chikomba Rural District Council and Murehwa Rural District Council have ZW$374 701 976 and ZW$373 548 403 each.
Auditor-General reports between 2019-2022 on state enterprises and parastatals drew attention to the loss-making entities.
For instance, the 2022 report by acting Auditor-General Rheah Kujinga showed that Zupco, which has been embroiled in numerous corruption scandals, failed to account for ZW$3.4 billion in revenue it generated in urban areas, due to non-submission of information, raising the risk of fraud.
The report also showed that Zetdc failed to account for millions of dollars in revenue due to a porous client payment system, with perennial losses plunging the parastatal into operational uncertainty.
2019 reports have also shown that the National Railways of Zimbabwe has been incurring substantial losses for over 10 years owing to sub-economic operating capacity, antiquated equipment and high provisions for doubtful debtors.
“Included in the inventories balance are spares for rail infrastructure and locomotives totalling ZW$698 537 547 (2019: ZW$ 664 634 384). These spares are for antiquated, decommissioned equipment and rail infrastructure,” read the report.
“The company has antiquated operating equipment and has been forced to rely on locomotives leased from third parties. All the lease contracts for the locomotives are denominated in United States dollars. This exposes NRZ to significant foreign currency losses. It also emerged that the railway company is owing its current and former employees millions of dollars in salaries and benefits. The non-re mittance of employee contributions further casts pensions into doubt. The report said that TelOne has significant legacy loans and borrowings amounting to ZW$46 066 757 523 (2019: ZW$41 604 029 684) principal plus interest accruals.
“The fixed-term borrowings approached maturity without realistic prospects of renewal or repayment. These conditions indicate that a material uncertainty exists that may cast significant doubt about the company’s ability to continue as a going concern.”
