Debra Matabvu

Pensioners and policyholders who lost their savings when the country switched from the Zimbabwe dollar to the multi-currency system in 2009, could soon receive compensation as pension and insurance companies have begun submitting compensation plans to industry regulator, the Insurance and Pension Commission (Ipec), it has been learnt.

Unofficial estimates suggest that pension and insurance contributors could have been prejudiced of more than US$6 billion through the conversion process.

A commission of inquiry led by retired High Court judge Justice George Smith – which was set up by Government in 2015 to investigate the possible losses during the 18-year period to 2014 – discovered that there was indeed “huge loss of value to insurance policyholders and pensioners”.

It also concluded that pensioners did not only lose their savings through the conversion process, but “throughout the investigation period”.

Some pensioners, it observed, were paid amounts as low as US0,08 cents for their lifelong contributions. Ipec commissioner Mrs Grace Muradzikwa recently told The Sunday Mail that some companies have since submitted their compensation plans, while others are still consulting with their stakeholders.

“We requested pension funds to submit their compensation plans in line with the recommendation of the commission of inquiry and as adopted by Government.

“Some have responded and we are analysing the responses. On the other hand, others requested more time to consult with their stakeholders. We continuously consult Government through the Ministry of Finance and Economic Development, which is our parent ministry,” said Mrs Muradzikwa.

“There are a number of legislative and supervisory reforms that the Commission is implementing to ameliorate challenges facing the sector.

“The Insurance and Pensions Commission Act, the Insurance Act and the Pension and Provident Funds Act are undergoing review to close the identified legal gaps so that Ipec can effectively and efficiently regulate the insurance and pensions industry for the protection of policyholders and pension scheme members as well as our regulated entities,” she said. Although the findings of the commission of inquiry were handed over to Government in March 2017, there is growing concern over delays in actioning the recommendations, especially at a time when current economic challenges are affecting the vulnerable members of society, particularly pensioners.

The Zimbabwe Pension and Insurance Rights Trust (ZimPIRT), which is a lobby group, has since approached Parliament to help ensure that some of the recommendations are expeditiously implemented.

ZimPIRT’s general manager Mr Martin Tarusenga – who was one of the commissioners to the Justice Smith Commission – said there is urgent need to protect pensioners and compensating those who were prejudiced.

“We have appealed to Parliament to have all this righted and regularised.

“The Senate has been discussing this motion and I am reliably informed the Portfolio Committee on (Budget), Finance (and Economic Development) is pushing to have this motion discussed in the National Assembly,” he said.

The commission of inquiry could not come up with the exact figure of how much prejudice was suffered due to poor record-keeping and reluctance to volunteer information by some of the companies, but “it was satisfied that the industry has reasonable capacity to make good and compensate policyholders and pension fund members for loss of value.”

Government, Ipec and the companies were also accused of being culpable of the huge losses that were suffered by both pensioners and policyholders.

In particular, industry players were accused of poor corporate governance, arbitrary benefit calculations, shambolic record-keeping, including unsustainable and unjustifiable expenses. “The findings of the investigation indeed confirm that there was huge loss of value to insurance policyholders and pensioners owing to failure by Government, Ipec and the industry to set up a fair and equitable process of converting insurance and pension values from Zimbabwe dollar to the US dollar,” read part of the Justice Smith report.

The inquiry investigated more than 20 insurance firms, 15 brokerages, self-administered pension funds, the Public Service Pension Fund and the National Social Security Authority (NSSA) Pension Fund.

Added the report: “The Commission recommends that the regulator (Ipec) requires institutions to prepare and submit a compensation scheme within a year of a date to be specified by the regulator.

“The compensation period shall be 1996 to the date when the compensation scheme is instituted. The Commission’s recommended currency for compensation is US dollar or its equivalent, notwithstanding that many of the contracts were entered into and subsequently concluded in the Zimbabwe-dollar era.”

Notably, the Justice Smith commission recommended that even if those pensioners and policyholders who were prejudiced are compensated, Government still needs to support those who lost their savings to inflation.

It duly proposed an old-age pension to alleviate their plight.

“Even after implementation of the compensation framework, there remains a large number of impoverished policyholders and pensioners who lost all their savings due to inflation.

“Government considers setting up a means-tested old age pension to alleviate the plight of these policyholders and pensioners and to address the issue of poverty in old age,” added the report.