Over 600 pension funds financially unsound, risk closure
By Insurance24
Vic Falls-Insurance And Pension Commission (Ipec) says it has identified over 600 financially unsound pension funds that it might need to close down to avoid continuous erosion of values.
There has been continuous shrinkage of assets emanating from high administration expenses, increasing liabilities not matching assets, staggered pensions benefit pay outs, significant amounts in unpaid benefits and none or low upwards review on benefits since 2009.
Ipec Head Pensions Department, Josphat Kakwere told delegates who attended the Zimbabwe Association of Pension Funds (ZAPF) 43rd annual congress in Victoria Falls last week that the commission would preserve those whose values are above a certain amount.
“We have financially unsound funds and around 600 have been identified. Ipec has said for such funds it may need to dissolved and where the amounts are above a certain level for accumulated value for individuals, these may need to be preserved.
“The preservation of those accounts will attract a lesser expense values than to allow the fund to continue operating,” he said.
He said where the amount does not warranty or is too little that money will be distributed to members of the fund.
Kakwere said in most cases contributor have ceased operations, gone under liquidation or have simply stopped paying contributions these the funds are not paid up. This has made the cost of running accumulated assets within the funds expensive.
The pension industry in Zimbabwe is divided into four categories. These are: Mandatory National Pension Scheme – NSSA, Public Services Pension Scheme – PAYG, Voluntary Occupational Pension Schemes and Individual Pension Plans.
NSSA and Public Service not under IPEC supervision. Low pension coverage is at 21% based on NSSA’s 1.23 million active contributors.
