Government embraces a fully funded pension scheme

Government embraces a fully funded pension scheme

Staff Reporter

Government says it is moving from Pay as you go pension scheme to a fully funded pension scheme, which requires an equivalent of US$4,8 billion based on 2012 actuarial valuation report.

The objective is to gradually capacitate the Fund to ensure it attains its objective of promoting and protecting the pension contribution and rights of pensioners.

In his 2021 budget presentation finance minister Mthuli Ncube said in line with Government policy of establishing a Public Service Pension Fund, the 2021 Budget was setting aside ZWL$1,2 billion as employer contribution @ 4% in line with the agreed framework, to increase capital base to the fund for investment.

“ In addition, Government will bring the following assets – commercial buildings and infrastructure, land, farms and financial assets and will then conduct actuarial valuation to determine the cover of the assets to the liabilities in order to clear its pension liability,”  he said.

Meanwhile as the agricultural activities have become more prone to climatic shocks and hence high risks of crop and livestock failure Ncube said farmers should encouraged to secure weather-based index insurance to protect their businesses through managing such risks.

He said government on its part had subscribed to the Africa Risk Capacity (ARC) under the AU and financed by AfDB and other various sources.

The ARC provides capacity building on preparedness for climatic shocks, as well as insurance against risks such as drought.

Following Government’s participation in the African Risk Capacity (ARC) drought risk insurance policy, complemented by the UN WFP Replica Policy for the 2019/20 agricultural season, Government received a total pay-out of US$1 755 890 in June 2020,”he said

He said the pay-out assisted the country’s substantial number of vulnerable households in select districts, through disbursement of unconditional cash transfer assistance to food insecure labour-constraint households (chronically ill, older person headed households) in the worst drought-affected wards.

A total of 77 767 households from Masvingo, (Chivi), Mat North (Binga), Mat South (Bulilima), Manicaland (Buhera) and Mashonaland East (UMP) benefited from the scheme.

“The total cost to implement this activity amounted to US$18 cash value per household including a US$3 administration cost. Zimbabwe is committed to participate in the 2020/21 ARC programme.

To relieve fiscal challenges that member states face in paying their premiums compounded by the effects of the COVID-19 pandemic, ARC has facilitated application of premium subsidy from KfW of German Government towards premium funding for the 2020/21 agricultural season,” he said.

Ncube added that the KfW of German Government and the World Food Programme (WFP) had committed to premium financing of $2 million each, to support Zimbabwe, whilst Zimbabwe will contribute US$500 000 towards premium financing.

This is expected unlock maximum insurance cover of US$20 million.