Staff Writer
The Insurance and Pensions Commission (Ipec) says while pension benefits are mirroring asset performance, they are far from meeting pensioners reasonable expectations.
Dr Grace Muradzikwa, at the Commission’s AGM on Monday, said improving pensioners insurance benefits is an area that requires more attention.
“We have been monitoring whether the benefits are matching asset performance. We are looking at the performance of these assets, and we want to see if the pension benefits that the pensioners are being paid are in line with asset performance,” she said.
She added that in that regard, Ipec introduced the Bread Index, which it has been monitoring.
“It has been improving from quarter to quarter, and we are really happy about this, but that is not convincing.
“The benefits are still not meeting pensioners’ reasonable expectations, and this is where we are falling short. They are mirroring asset performance, but they are not meeting pensioners’ reasonable expectations,” said Dr Muradzikwa.
She highlighted that giving a pensioner an average of 32 loaves of bread, in most cases, is not adequate.
“The pensioners are just saying, ‘Give me something that reflects the contributions that I have made over the years. I think that is really what pensioners are asking for,” she said.
Dr Muradzikwa said Ipec’s goal is to make sure that happens. “Therefore, in the long term, we think that what we really need are pension reforms to improve benefits in the medium to long term.
Dr Muradzikwa also highlighted that bringing closure on the 2009 losses will result in an improved pensions industry and enhance confidence levels.
She said the delays in finalising the compensation may also have been a result of challenges that Ipec faced around granular data and asset separation during the investigative period.
“Now we have come up with a number of interventions so that we can close this; hence, instead of insisting on the granular data and proof of asset separation, we have been using the financial statements, and I also want stakeholders to know that we are now aligned with the industry in terms of closure,” she said.
Dr Muradzikwa added that there is a real strong commitment from the industry to close pre-2009.
“We just need our stakeholders, the Ministry of Finance and the Attorney General’s Office, to come on board,” she said.
She added that the government is ready to disburse their portion towards pre-2009, as are IPEC and the industry.
The insurance and pensions industry still continues to suffer due to legacy issues whereby depositors, pensioners and investors lost value due to changes in currency in 2009.
Dr Muradzikwa said the pensions industry penetration rate is currently at 2 per cent, but there is scope for growth should industry players develop products that resonate with clients.
The government, through Treasury, said it is expediting the gazetting of the amendments to Statutory Instrument 162 (SI 162) of 2023, which will unlock private sector compensation of the pre-2020 2009 compensation.
The statutory instrument gazetted in 2023 set out the modalities for compensating pensioners, and the government, on its part, says it has already started compensating its pensioners.
