Pensions players now in equitable distribution of revaluation gains
GOVERNMENT has said Insurance and Pensions players are now in the process of equitably distributing revaluation gains on assets attributable to currency reforms undertaken in 2019 in line with the Guideline on Adjusting Insurance and Pension Values provided by IPEC.
Policy holders lost millions of dollars during the hyperinflation era in 2009 and they are yet to be compensated besides recommendations put forward by the Justice Smith Commission.
In his 2022 budget finance minister Mthuli Ncube said pursuant to an allocation of US$75 million investment asset by Government to IPEC, as part of compensation measures for lost value by pensioners, a dividend of US$400 000 was declared and is being disbursed to targeted beneficiaries.
Subsequent disbursements will be made in 2022 and beyond, leveraging on this investment.
“Government, in consultation with industry representatives, has been working on bringing closure to the pre-2009 compensation.
“To this end, Government is finalising the 2009 Compensation Framework that will provide guiding principles on the criteria for assessing and quantifying prejudice in relation to the insurance and pensions contracts, as highlighted in the Smith Commission of Inquiry on Conversion of Insurance and Pensions Values from Zimbabwe dollar to US dollar Report,”he said
Ncube said it was envisaged that the compensation modalities will be concluded before the end of 2021, with pensioners starting to get payments in 2022.
Meanwhile he said recommended capital requirements to guide the industry are being finalised.
Government launched the Zimbabwe Integrated Capital and Risk Programme (ZICARP) in June 2021, aimed at promoting financial stability of the insurance sector through setting capital requirements proportionate to the level of risk.
He added that the insurance industry’s level of compliance with minimum prescribed assets (PA) threshold remains low, compromising Government investment in infrastructure and other initiatives.
“In order to ensure a wide range of investment products, Government has expanded the Prescribed Asset Status framework to include bankable projects and private equity projects that are in line with NDS1 policy thrust.
The Insurance and Pensions Commission (IPEC) Bill, the Pensions and Provident Funds Bill and the Insurance Bill, whose enactment will go a long way in addressing deficiencies in the current regulatory framework and empower the Commission to deliver its mandate are at various stages of approval.