eBusiness Weekly
Martin Kadzere
Government is torn between mandating the Insurance and Pension Commission (Ipec) to spearhead compensation of pensioners and policy holders that were short-changed during a controversial conversion of their benefits in 2009 and to create a completely new independent body for the process.
This comes after a Commission of Inquiry set up by President Mugabe to investigate the conversion, recommended some of the industry’s assets that “survived” Zimbabwe’s hyperinflation be used to compensate thousands of pensioners and policy holders that lost their savings.
Government launched an investigation into the process used to convert pensions and insurance benefits following an outcry from pensioners and policy holders.
Sources told Business Weekly that while Finance Minister Patrick Chinamasa had recommended another commission be set up to make the compensations, commissioners are of the view that Ipec should be tasked to spearhead the process.
“This is still under consideration, but at the last meeting Minister Chinamasa requested the commissioners to provide terms of reference, which would form the basis for compensation whether by another commission or by the Insurance and Pension Commission,” said an official, who cannot be named because the details are still private.
While the report has not come up with the scale of prejudice in monetary terms, the commission recommended that compensation be paid to thousands of policy holders and pensioners from assets that survived Zimbabwe’s hyperinflation.
“Coming up with the actual value is not feasible as the compensations would be made depending on the type of policy products or whether the pensioner was under defined benefit or contribution scheme. There are a lot of variables,” another source said.
The terms of reference considered variables including types of pension and policy products. Efforts to get a comment from Minister Chinamasa and commission chair retired Justice George Smith were fruitless by the time of going to print.
While inflation is prominently blamed for the loss of value of pension funds and policy holders’ wealth, the commission noted that it was not justifiable for insurers and pension funds to make insignificant payouts given that some members had contributed for a long time, several years before the onset of the hyperinflationary era.
Ipec commissioner Tendai Karonga said in an interview he was unaware his commission could be tasked to undertake the process, “but it is feasible if capacitated”.
Zimbabwe went through erosion of pension fund values emanating partly from the effects of the hyperinflationary environment the country experienced between 2000 and 2009 and the subsequent conversion of funds from Zimbabwean dollars to US dollars..
