Inactive pension funds increase

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THE Insurance and Pensions Commission (Ipec) says viability challenges faced by employers have led to an increase in the number of inactive pension funds in Zimbabwe.
This also comes as the National Social Security Authority (NSSA) has said as many as five million Zimbabweans are threatened with old age poverty due to a social security coverage gap in the country.
“Of concern to us as a regulator is the increase in the number of inactive pension funds. Out of the 881 insured funds that were in existence at the end of the 2019, only 600 were active,” Ipec commissioner Grace Muradzikwa told journalists recently.
“This has mainly been attributed to viability challenges faced by the sponsoring employers.
“With self-administered funds, we had 170, but only 144 are active and that is really worrying,” she said.
According to the regulator, an inactive fund is one that is either “paid-up or under dissolution”.
Muradzikwa said it also means that these funds will not be receiving contributions.
“This is a challenge because these funds will still be having fund administrators who levy costs on then”.
Besides the business viability challenges amid the country’s worsening economic crisis, the commissioner said the situation was being worsened by the fact that “the ratio of allowances being paid as non-pensionable remuneration has being going up”.
“The remuneration mix of the average formally-employed Zimbabwean is running away from pensions and other attaching liabilities.
“This, however, only has short-term benefits, the long-term impact is that we are deleting our national savings fund.
“This is something that labour should also be worried about,” she said.
Ipec reports also show that insured pension funds in the country declined from 909 in September to 881 in December.
It also comes as contribution arrears have continued to mount. Ipec says arears amounted to $621,68 million as at December 31, 2019.
An International Labour Organisation (ILO) convention in 1952 set minimum standards for social security covering such areas as unemployment benefit, medical care, maternity, sickness and family allowances, all of which are not covered in Zimbabwe.
And even though the country’s social security framework does cover old age, this is only limited to the dwindling formal sector.
“The existence of a huge informal sector, which is not covered by social security, means that the country is still very far away from attaining the ILO’s minimum standards for social security,” Shepherd Muperi, NSSA’s acting chief social security officer, told journalists at a workshop in Harare recently.
“Without social security cover, workers in the informal sector are vulnerable to poverty in the event of life contingencies like old age,” he said.
According to a recently published Zimbabwe National Statistics Agency report, 63,49 percent of the country’s “economically active” population was employed in the informal sector by 2017, up from 61,44 percent in 2012. newsdesk@fingaz.co.zw