Government reviewing insurance and pension industry- Finance minister
Noah Kupeta
HARARE, Government is working with the Insurance and Pension Commission (IPEC) to review the regulation of the insurance and pension industry in a bid to preserve the value of pension benefits and policy holders, a government official has said.
Presenting his 2019 Budget statement, Finance and Economic Development Minister Professor Mthuli Ncube emphasised that the reforms are envisaged under the Transitional Stabilisation Policy (TSP) to strengthen and safeguard pension funds and benefits.
The development, Professor Mthuli Ncube further said, is essential in that all pension funds will be monitored under a robust regulation framework.
“Pursuant to the reform envisaged under the TSP to strengthen and safeguard pensioner funds and pension benefits, it is essential that all pension funds follow under a robust regulation framework.
“To this end, Government is reviewing the current regulatory framework with a view of consolidating all insurance, medical aid schemes, legal aid societies and pension funds including the National Social Security Authority under a single regulator – Insurance and Pensions Commission (IPEC).
“The obtaining macro-economic environment has resulted in revaluation gains on assets supporting liabilities to shareholders and not the policyholders and pension scheme members.
“This is undermining confidence in insurance, life insurance and pension business and impacting negatively on savings mobilisation,” he said.
The measures will also take into consideration the on-going debate on the conversion of insurance benefits from Zimbabwean to United States Dollar all in an effort to preserve value of policy holders.
Professor Mthuli Ncube said Treasury has directed IPEC to provide guidelines on industry wide conversion process to retain some value in their policies and pension accumulations.
A Harare based economist who declined to be named on condition of anonymity said the pronouncement by Professor Mthuli Ncube should also pay attention to rural pensioners who bore the brunt of the current marco economic upheavals in the country.
The economist (name withheld) said national economic and financial policies should be inclusive of rural people who form the bulk of the country’s population.
“Government should ensure that such policies bear in mind rural pensioners by directing IPEC to come up with mechanisms that cater for such demographics.
“Insurance companies should break the barriers of elitism by embracing the rural counterparts by ensuring that they are the first to benefit.
“It is advisable that insurance companies relook at their products in line with modern trends, in other words they are supposed to analyse and properly segment their markets.
“Insurance business is generally premised on stable macro-economic fundamentals which, if they are not stable, as is the case in our current scenario, policy pronouncement should address such disparities,” he said.
Government recently directed IPEC to provide insurance policies in foreign currency on selected products whose liabilities remain in the same currency following comprehensive consultations with the Reserve Bank of Zimbabwe, a development analysts hailed as “progressive”.
Insurance policies which were running in foreign currency for instance until their natural expiry and Safari operator’s licence among others were reviewed.
Government remains committed to facilitate growth, transparency and accountability to the insurance and pension industry by constant review of policy premiums and benefits.
Recently, NSSA Board Chairman Dr Cuthbert Chidoori reviewed Pension and Other Benefits Scheme (POBS) minimum monthly retirement pension to ZW$200 from ZW$80 while all pensions have since been increased by 65% across the board.
