Farai Mabeza, Senior Staff Writer 
PARLIAMENT recently passed the Pension and Provident Fund Amendment Bill. The Bill, together with the Insurance and Pensions Commission Bill and the Insurance Bill — still before the National Assembly — form part of changes to the country’s legislation and regulation around the insurance and pensions sectors. These changes are part of a broader reform agenda pursuant to recommendations made by the Justice Smith Commission of Inquiry into the conversion of insurance and pensions values, from the Zimbabwe dollar to the US dollar in 2009. The Financial Gazette’s Senior Staff Writer, Farai Mabeza (FM), spoke to Zimbabwe Insurance and Pensions Apex Council (ZIPAC) deputy chairperson Rutendo Magorimbo (RM) about these developments. She says provisions in the Pension and Provident Fund Amendment Bill for pension funds to invest in offshore assets allow for diversification of investments, which can help in preservation of value for pensioners while at the same time boosting confidence in the sector. Below are excerpts of the interview:
FM: How important is this Bill to the industry?
RM: The Bill is very important in that it seeks to underscore the need to protect fund members’ interests, promote security of funds and at the same time ensure growth and stability in the industry. This will provide redress to negative perceptions and boost confidence in the industry. The increased emphasis on provision of important communication to stakeholders is a positive move which aligns disclosure requirements, walking the walk with our valued customers and to enhance fair treatment of customers.
FM: What’s your general reaction to the Bill?
RM: As an industry we welcome the review of the Bill as part of the government’s efforts in improving the welfare of pension fund members. Enhanced regulation aligned with international best practice standards is therefore a step in the right direction in strengthening the pensions industry.
FM: Do you think the Bill’s provisions will help improve the remission of contributions to your members by employers?
RM: There is a provision which compels participating employers to honour their obligations in payment of contributions failure which will attract penalties. This will be helpful in improving accountability in the remission of contributions on time.
FM: Can you give us an indication of how much employers are in arrears to your members?
RM: As per IPEC’s 2021 Q4 Pensions Report, contribution arrears stood at $4,27 billion as at December 31, 2021. This is mainly driven by continued non-remittance of contributions by some sponsoring employers due to viability challenges as well as timing differences between end of reporting period and due date for remitting contributions.
FM: Do you think improving the legislative framework will help boost confidence in the sector?
RM: Yes, such provisions for pension funds to invest in offshore assets allows for diversification of investments which can help in preservation of value for pensioners while at the same time boosting confidence in the sector. Improved governance in the pensions industry will also go a long way in improving transparency and accountability as well as guarding against leakages that some players were experiencing due to certain malpractices such as unreasonably high expense ratios.
FM: What else is needed to improve public confidence in the sector?
RM: Conducting public awareness campaigns at industry level aimed at educating pensioners on causes of loss of value, highlighting importance of adequate pension contributions and injecting voluntary member contributions to boost the retirement pot, and emphasising the need to rebuild.
These campaigns need to be complemented through ensuring that measures are in place to preserve value for pensioners. This will help serve as an assurance to pensioners that their savings are safe and secure as they rebuild.
FM: Prescribed asset investment compliance also remains low. How do you think this issue should be handled in the current environment?
RM: Prescribed asset compliance remains under threat owing to macroeconomic environment issues such as high levels of inflation. As an industry we think there should be a balance between value preservation and contributing to development of the nation. As such, it is our considered view that prescribed assets should be structured in a way that achieves a win-win situation between value preservation and developmental aspirations. I am happy to report that we are having fruitful engagements with our regulator IPEC on this aspect.
newsdesk@fingaz.co.zw
