The Herald (Harare)

13 November 2012

Zimbabwe: Pensions Row - Govt's Intervention Welcome

Government's intervention last week in the standoff between pensioners and insurance companies over payment of benefits that has been raging on since the dollarisation of the economy is welcome. Many Zimbabweans who have been creating wealth for this country in different sectors of the economy have been contributing to pension funds since 1980 and some of them have since retired, but only to be told their investments were flushed down the drain with the introduction of the multiple currencies in 2009.

There are also hundreds of thousands who were anticipating a peace of mind after retiring, having bought insurance policies to cushion them.

Some of them sold their houses to buy these policies and they used the Zimbabwean dollar when it had value. All these people also lost out as their insurers later reneged on promises blaming hyperinflation.

Government should find a way to protect these hapless investors who genuinely invested their savings, but lost out due to the effects of the illegal sanctions imposed on the country by the West.

Pension funds and insurance companies have become some of the richest institutions in the country as witnessed by the massive infrastructure they constructed and bought over years.

They collect hundreds of thousands of dollars every month in rentals and contributions from members, which they invest, while another portion of the money is used for other administrative costs.

However, it is disturbing to learn that the insurance firms have been clashing with pensioners and policyholders dissatisfied with the paltry benefits being disbursed to them.

Some of the pensioners have been receiving a paltry US$8 per month. If the bulk of the returns of the investments and members contributions are going towards salaries and perks for pension fund managers, we implore the Government to intervene and arrest the situation.

It is a welcome development that Finance Minister Mr Tendai Biti has written to the Insurance and Pensions Commission, the insurance regulatory body, demanding an explanation concerning complaints about paltry benefits. The IPEC should respond to the allegations that are being levelled against it.

There is no reason why these pensioners should suffer the effects of dollarisation because some of them bought these policies when the Zimbabwean currency had value. It is clear that this money was used to buy some of the immovable properties that insurance companies have today.

Minister Biti should be applauded for declaring that contributions for pension and insurance were binding contracts that had to be honoured.

The minister was quoted as saying in our issue of November 8 that: "The companies say that the contributions were wiped out by inflation, but they're not considering the true value of contributions and assets before the hyperinflation period."

Before the hyper-inflationary environment, many insurance companies were buying properties and investing the members' contribution. The value of those properties, investments and members' contributions should now at least pay a descent monthly pension for retired members.

The probe into the people who lost investments during the Zimbabwe dollar era should not end with pensions and insurances alone, but should move to thousands of depositors who lost their money in banks when the country switched on to multiple currencies.

Although the debate to compensate depositors might be contaminated by the issues of zillions that were flushed into the banking sector during the era of "burning" money, at least there are some people who had genuinely earned their money through legitimate business deals that need to be looked at.

Ever since the formation of the inclusive Government, the minister has been calling for the establishment of a fund to compensate the depositors.

That fund is long overdue because the people's earnings and savings cannot just be wished away like that.

At least the minister can come up with a compensation benchmark and possibly use the prevailing exchange rate when the country switched onto the US dollars as the basis for compensation. The people will at least have solace in being called by the bank to receive a few US dollars.

We believe the minister raised this critical issue of the impasse between pension funds and insurance firms after carefully looking at this matter and Zimbabweans do not expect this to end as another talk shop.

Today there are thousands of people who are so stressed because their pension contributions in US dollars is almost nil. If they had a way out, they could refuse to retire and extend their contracts so that they build more on their pensions.

Government should help build confidence in the insurance sector by at least finding a way to compensate the people who lost on their investments. It is very sad that people now want to work until they die because that social safety net where retired workers would fall on has gone with the wind.

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