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IPEC cracks down on non-compliant pension funds

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The Insurance and Pensions Commission (IPEC) is stepping up its enforcement efforts against pension funds that have failed to comply with compensation scheme requirements put in place to address losses suffered during the hyperinflation period of 2009.

At its annual general meeting last week, IPEC announced its decision to take legal action against 50 non-compliant pension funds.
IPEC Commissioner Grace Muradzikwa revealed that out of 1,200 compensation plans submitted for review, only one had met the requirements. “We received and reviewed 1,200 compensation plans, against the 1,264 planned. However, only one pension fund was approved and several others are close to meeting the requirements,” Muradzikwa said.

The directive, issued last year, required insurers and pension funds to submit their compensation plans by December 31, 2023. These plans aim to compensate policyholders for the significant losses they suffered during the 2009 hyperinflation crisis. The process, governed by Statutory Instrument (SI) 162 of 2023, has been plagued by challenges since its inception in 2017.

Muradzikwa cited several obstacles, including a lack of detailed data and appropriate actuarial assumptions. “The industry did not have sufficient data on the retirees who were contributing, which made it difficult to accurately assess these compensation schemes,” he explained. The IPEC review process was further complicated by the summary nature of the reports and the absence of crucial details on asset segregation before 2009.

Despite these obstacles, IPEC remains committed to ensuring that retirees receive adequate compensation. “We have to ensure that retirees receive compensation. We also have about 50 funds that have not submitted any compensation plan and we have started taking them to court,” Muradzikwa said.

The SI allows IPEC to take legal action against non-compliant pension plans, a measure that has already been put in place.

The compensation framework, designed to address valuation errors arising from currency conversions during the period of hyperinflation, includes the use of independent actuaries and specific financial metrics for calculations. Despite the challenges, this framework is expected to enhance policyholder protection and restore confidence in Zimbabwe’s insurance and pensions industry.

FCB

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