IPEC Sounds Alarm Over Governance Failures, Pension Fund Fragmentation
Staff Writer
VICTORIA FALLS — The Insurance and Pensions Commission (IPEC) has raised concerns over governance failures, weak compliance, fragmented pension structures and growing integrity risks within Zimbabwe’s pensions industry, warning that poor stewardship is threatening retirement security for thousands of pensioners.
Addressing delegates at the 51st Annual Congress of the Zimbabwe Association of Pension Funds (ZAPF) in Victoria Falls, IPEC Director Pensions, Mr Cuthbert Munjoma, delivered a hard-hitting assessment of the sector, saying trustees and fund administrators must urgently reform governance systems, improve transparency and consolidate operations to restore confidence in pension funds.
Munjoma said Zimbabwe’s pension industry remained heavily dependent on the competence and integrity of trustees because nearly all private pension schemes are defined contribution funds.
“Ninety-seven percent of registered private pension funds are defined contribution schemes, which means the benefits members receive at retirement depend largely on the quality of governance and investment performance,” he said.
“The issue of the quality of trustees in this market becomes critically important because they are custodians and stewards of these investments.”
He warned that IPEC was increasingly concerned about related-party transactions within pension fund groups, where administrators, custodians, asset managers and other service providers operate under the same corporate structures.
“Transactions must happen at arm’s length and there must be value for money for pension scheme members,” Munjoma said.
The regulator revealed that inspections conducted last year uncovered significant governance deficiencies, particularly in preservation and umbrella funds, prompting IPEC to issue corrective directives requiring compliance by March 31 this year.
Munjoma also disclosed that IPEC had established an integrity committee to investigate ethical concerns and develop a fit-and-proper framework for pension industry executives and trustees.
“We do receive market intelligence on what is happening in the market, especially around investments and integrity issues,” he said.
“We have set up an integrity committee to deal with ethics and we expect by year-end to have a framework for fit-and-proper assessments of key persons in pension funds and administrators.”
In one of the strongest messages delivered at the congress, Munjoma said Zimbabwe had “too many” pension funds and challenged the industry to embrace consolidation to improve efficiency and investment capacity.
“As a regulator, we are convinced that we do have too many pension funds. There is scope for consolidation,” he said.
“We challenge practitioners to consider the advantages of consolidation in terms of scale and investment efficiency.”
He said fragmented operations were undermining economies of scale and increasing administration costs at a time when pension funds should be focusing on long-term infrastructure and developmental investments.
The regulator is also pushing for the establishment of a shared ICT platform for pension funds to reduce duplication and improve supervision.
“ICT infrastructure is just like public infrastructure. We cannot all build our own railway line to Bulawayo,” Munjoma remarked.
IPEC further warned trustees against failing to separate pension fund assets from employer assets, describing the practice as a major legal and governance risk.
“We are still observing some pension funds where assets are registered in the name of the employer. When it comes to dissolution, there is trouble because the assets legally do not belong to the pension fund,” he said.
Munjoma also took aim at poor communication with pension contributors, saying some funds were failing to hold annual general meetings or issue benefit statements to members.
“You cannot speak of confidence if members are not receiving benefit statements or meaningful communication about their pensions,” he said.
He urged pension funds to improve retirement education and confront the growing problem of low contributions caused by non-pensionable allowances.
“People retire expecting benefits linked to their full earnings yet contributions were based on much smaller pensionable salaries,” he warned.
The regulator also expressed concern over rising appetite for alternative investments and concentrated offshore exposure, cautioning pension funds against herd behaviour and weak due diligence.
“We are seeing increased appetite for alternative investments and there is need for strong due diligence because investments can fail, especially in alternative spaces,” Munjoma said.
He singled out excessive concentration in offshore investments, particularly in South African stocks.
“Every asset manager is investing in the same shares. We are calling for diversification,” he said.
On compliance, Munjoma said several pension funds were failing to submit audited financial statements, actuarial valuation reports and quarterly returns on time, forcing IPEC to intensify enforcement measures.
“We are being approached by pension funds seeking audits when their returns were due months earlier. That is certainly not ideal,” he said.
He warned that IPEC would compel reimbursement where pension funds overcharged members outside approved expense frameworks.
The conference also heard that the newly enacted IPEC Amendment Act, signed into law in April 2026, significantly expands the regulator’s powers, including oversight over public pension schemes, accreditation of service providers and establishment of policyholder and pension protection mechanisms.
“The IPEC Bill was eventually passed into law on April 24, 2026, and it enhances the regulatory scope of IPEC,” Munjoma said.
Meanwhile, the regulator has escalated action against employers failing to remit pension contributions, confirming that it has already garnished bank accounts of defaulting entities.
“Those that were not playing ball, we garnished the bank accounts. Garnishment is disruptive and a last resort, but we will continue acting where necessary,” he said.
Munjoma said IPEC had already targeted the 50 largest defaulting funds and was now moving to the top 100, while also monitoring smaller schemes failing to remit contributions.
The tough regulatory stance comes as the pensions industry faces growing pressure to rebuild public trust following years of currency instability, low payouts and concerns over governance standards.
