MUTARE– Government is enacting a law which will grant the Insurance and Pension Commission wide ranging powers including investing in offshore jurisdictions to preserve pension value, officials have said.
By Donald Nyarota
Insurance and Pensions Commission (IPEC) Director of the Pensions department Josphat Kakwere said the move will cushion contributors from loss of value as has been the case since 2008 when inflation and change of currency eroded pensioners funds.
Kakwere said under the new Pensions and Providence Bill, IPEC will now be able to police errant employers who fail to remit pension contributions.
He said over $600 million is owed to pensioners by non-compliant employers who are not contributing to the pension fund.
“Under any inflationary environment there will be loss of value which basically arises when there is transfer of value from creditors to debtors and pension fund as investors they are actually affected in that respect.
“It also depends with the nature of investments, there are investment vehicles which are able to preserve value like properties, equity and other alternative investments.
“So, in that regard, we are saying we have in the Bill which is coming, included an option for pension funds to invest offshore as a way of diversifying their investment holdings.
“We do not normally experience the same inflation locally and outside so the idea is that if we can have hyper-inflation in Zimbabwe in other countries it will not be same, hence that value should be invested offshore to preserve their value,” he said.
“The old law does not give the regulator powers that they need to have, for example troubled pension funds, currently we cannot appoint say a liquidator or curator so at times our resolution mechanisms for troubled entities becomes protracted because we are not fully empowered.”
Kakwere said apart from allowing investment in offshore jurisdictions the new law will also empower IPEC to sue errant employers as well as their executive directors in their personal capacity.
He said some innovations were as a result of the experience gained during the volatile inflationary period which negatively affected pension funds.
“There are certain lessons that we learnt from the previous conversion from Zimbabwe dollar to the multi-currency regime, one of the reasons value was lost was because when assets were being revalued the pensions were not also included.
“We can’t talk about the pension fund without talking about the macro economic environment because the hyperinflation period has affected the pension earnings we cannot run away from that.
“The issue of corporate governance, if you look at our current law it does not talk much about the regulation of pension fund administrators and those things have been incorporated into the Bill so that there is efficiency in the regulation of the sector,” said Kakwere.
Since the beginning of the hyper inflationary era, pensioners contributions have been eroded with some receiving as little as RTGS25 per month.