Staff Writer
GOVERNMENT has implored pension funds to urgently invest in data in management systems as unclaimed benefits soar 62% with backlog stemming from administrative challenges, Insurance 24 reports.
Ordinarily,unclaimed benefits imply to pension benefit that has become legaly due for payment for which no claim has been lodged and, it has remained unpaid to the member or beneficiary for a period more than six months.
Over the years this number has going up die to various reasons but at the heart of the crisis is a troubling mix of poor record-keeping, lack of member education, and outdated systems that continue to deny beneficiaries access to what is rightfully theirs.
Information from the regulator, Insurmave and Pension commission,(Ipec) show that 94,702 pension fund members had unclaimed benefits by the end of December 2024.
The issue of data is also at the center of finalization of the compensation for the pre 2009 losses.
Delivering his key note address at the ongoing Zimbabwe Association of Pension Funds 50th Annual conference in Victoria Falls this afternoon, Finance minister, Mthuli Ncube who applauded the industry for having 960,000 members said notwithstanding this achievement, there was now need to focus on addressing the challenges facing the sector.
“Now, there is a rise in unemployment benefits, which have gone up by 62.19%, reaching an amount of US$66.6 billion.This was by December 2024. This is quite a large number of unclaimed benefits. This backlog stems from administrative inefficiencies, challenges in adequate beneficial tracing, and poor member data management.Without resolution, the situation risks further and broader public confidence in pension systems.In this regard, I urge all pension funds to urgently locate their beneficiaries and invest in better data management,” he said
Mthuli said portfolio concentration of assets under management stood at 10.45 trillion ZIG, which is approximately US$2.18 billion by end of Q4 2024 translating to a 36.86% nominal increase.
However, he said this loss was heavily skewed towards investment in property, which accounts for 4.14% of the existing equities, accounting for 29.06%.
“These asset classes expose funds to volatility, currency risks, and market corrections, hence the need to diversify.
So clearly, investing in institutions that raise risks, with some of your ability to do that, to deal with property and equity conditions, is the way to go if you can diversify your investments. Pension funds must therefore shift from over-reliance on real estate and equities and diversify into other investment classes. I’m very pleased with the investment funds saved into other alternative assets, beyond equities and real estate, through the Prescribed Assets Programme.
He said Government will continue to promote projects in areas such as infrastructure, agriculture, as well as those in venture capital, space, and others, whether they enhance returns and drive economic transformation.
Going forward, Ncube said government bwill also be divesting out of the National Venture Capital Fund to house new pension funds into the vehicle, which is critical for supporting our stack-ups in our national economy.
“Going forward, the Government will still like offshore investment approvals to promote infrastructure, agriculture, and venture capital, and diversify asset classes to enhance returns and drive economic transformation.Furthermore, I’m advised that the report highlights governance and compliance issues with only 1,162 out of 1,477 registered funds submitted quarterly returns, representing a compliance rate of 78.7%. This is below acceptable levels and may undermine transparency. I urge you all to really make every effort to improve this compliance rate,” he said
He said the industry should acknowledge significant progress as well in areas including the increase in active members by 9.46% year-on-year to 406,472.
Deferred members rose by 19.91% to 23,294, whilst pension increased by 8.72% to 103,742.
“Turning now to investment in prescribed assets, which I already mentioned, the sector surpassed the 20% minimum requirement for prescribed assets, reaching 21.14% by Q4 2024, a commendable commitment towards supporting national development priorities,” he said.
