At least 50 companies are deducting amounts from their employees’ salaries and wages but failing to remit the amounts to the relevant retirement funds amid fears pension scheme members will in future receive reduced or no benefits at all.
This comes as the pensions contribution arrears hit ZWL$5.3bn at the end of March this year.
It is a criminal offence for companies to deduct pension contributions from employees and fail to remit to respective pension funds.
According to pension regulations such as Section 2 (A) of Statutory Instrument (SI) 61 of 2014, and SI 323 of 1991, all companies are compelled to remit contributions into the pension fund within 14 days from the end of the calendar month to which the pension contribution relates.
The Insurance and Pensions Commission (IPEC) yesterday named and shamed 50 defaulting companies dominating the arrears chart.
These include the country’s tax collector Zimbabwe Revenue Authority, retailer OK Zimbabwe, financial services group FBC Holdings, power utility ZESA Holdings and its subsidiaries, the National Railways of Zimbabwe, coal miner Hwange Colliery Company Limited, Zimplats, RioZim, Harare City Council, Bulawayo and Chitungwiza City Councils and diversified conglomerate Innscor Africa Limited.
Diamond miner, the Zimbabwe Consolidated Diamond Company, the Civil Aviation Authority of Zimbabwe, the Gran Marketing Board, Simbisa Brands and the country’s largest milling company National Food Limited and Freda Rebecca Gold Mine are other companies that deduct employee contributions but fail to remit the funds, to the detriment of employees.
“IPEC has noted with concern, the continued failure by some sponsoring employers to remit pension contributions to their respective pension funds, to the detriment of pension scheme members, who end up receiving reduced or no benefits, when they become due,” the insurance and pensions regulator said.
“IPEC has been receiving complaints from pension scheme members who have received reduced or no benefits owing to failure by their sponsoring employers to remit pension contributions after deducting the same. “IPEC calls upon trustees of the affected pension funds to put measures in place to ensure the said employers remit outstanding contributions, for the benefit of their pension scheme members.
“In addition, labour organisations are urged to engage the employers who are not remitting pension contributions for the purposes of protecting members against old age poverty,” IPEC said.
The failure to remit contributions deducted might point to the viability challenges faced by the companies due to deteriorating economic conditions.
This is also a reflection of the general performance of the frail economy.
The surging arrears have also threatened the viability of the pension sector.
Apart from that, the non-remittance of pension contributions by companies has deprived members and their families of their entitlements in the event of retirement, death or other unforeseen developments.
These benefits can only be paid to beneficiaries whose contributions and premiums are up to date.
Zimbabwe’s pensions sector has more than 1 000 registered funds. But, close to 30 pension funds were undergoing dissolution in 2021, necessitated by financial challenges faced by the sponsoring employers, some of whom had closed down.