PARASTATALS and local authorities have been making up the bulk of defaulters in remitting contributions to pension funds, despite them deducting instalments from workers, which is likely to worsen the plight of workers, the Insurance and Pensions Commission (IPEC) has revealed.
NATHAN GUMA
IPEC published the top 50 defaulters as at 31 December 2022, with parastatals having the largest outstanding remittances.
The Zimbabwe Electricity Transmission and Distribution Company (Zetdc) topped the list with outstanding remittances of ZW$2 651 124 011 to the Zimbabwe Electricity Industry Pension Fund.
Three other major institutions have outstanding remittances surpassing the ZW$1 billion mark namely; National Railways of Zimbabwe (NRZ), Zimbabwe Power Company (ZPC) and Premier Service Medical Aid Society (Psmas).
NRZ had ZW$2 649 045 373 in outstanding remittances to the National Railways of Zimbabwe Contributory Pension Fund, while ZPC has ZW$1 504 621 622 in outstanding remittances, as at 31 December 2022.
The financially beleaguered Public Service Medical Aid Society which has not been remitting to First Mutual Life, saw its outstanding remittances bloating to ZW$905 611 097.
Power utility, the Zimbabwe Electricity Supply Authority (Zesa) has also been caught in the defaulting storm with two of its sponsoring employers, Zesa Holdings and Zesa Executive owing ZW$179 584 183 and ZW$288 203 231 to their pension funds respectively.
Telone has outstanding remittances of ZW$81 381 487 to its pension fund, Communications and Allied Industries Pension Fund.
Local authorities had the relatively less outstanding remittances, with Gweru owing ZW$199 734 266, while City of Harare has ZW$183 110 in outstanding remittances.
“Companies deduct the money, but they do not remit it to their respective pension funds. That is the problem we are trying to address of companies deducting pension contributions but not remitting them.
“So, the effect of that is that if your money is deducted from your salary, and it is not remitted to the pension fund, after you have retired, you are supposed to receive your pension from the pension fund.
“But if the employer was not remitting the funds, it means that the pension fund will not be in a position to pay you because they did not receive contributions, or they will only pay you a fraction of what you are entitled to, based on what they have received,” said Lloyd Gumbo, IPEC public relations manager.
Most parastatals have been incurring losses, with their current liabilities exceeding current assets.
The 2019 Auditor General’s report on State Enterprises and Parastatals flagged parastatals, among them the National Railways of Zimbabwe (NRZ) and TelOne as loss making and highly indebted government-owned companies whose viability remains in doubt.
The report showed that NRZ has been incurring substantial losses for over 10 years owing to sub-economic operating capacity, antiquated equipment and high provisions for doubtful debtors.
“Included in the inventories balance are spares for rail infrastructure and locomotives totalling ZW$ 698 537 547 (2019: ZW$ 664 634 384). These spares are for antiquated, decommissioned equipment and rail infrastructure.
“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 Stated dollars. This exposes NRZ to significant foreign currency losses,” read the report.
It also emerged that the railway company is owing its current and former employees millions of dollars in salaries and benefits. The non-remittance 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.”
The company had long outstanding foreign creditors which amounted to US$18 586 005 as at December 31, 2020 and 75% of these creditors were overdue with more than 120 days.
