LIVINGSTONE MARUFU
Zimbabwe has approved the disbursement of US$175m to pensioners and policyholders as compensation for loss of value when the government dollarised the economy in 2009, ditching its local currency, largely due to inflationary pressures.
“In recognising the prejudice suffered by pensioners and policyholders, the Cabinet has approved that the government contributes US$175m towards the pre-2009 compensation to partly cover for the loss of value suffered.
This will also bring closure to this long outstanding matter,” Information, Publicity and Broadcasting Services minister Monica Mutsvangwa told a post Cabinet briefing on Tuesday.
“Cabinet further highlights that draft regulations to bring legal force to the compensation framework are now in place and the regulations will be issued in terms of the Insurance Act and the Pensions and Provident Funds Act.”
She said the regulations outline the process of quantifying prejudice to members in line with the type of contract, that is, Defined Benefit, Defined Contribution, life insurance savings policies and personal pensions.
They also cover the calculation of prejudice for members of funds that converted from Defined Benefit to Defined Contribution. The sources of funding for the compensation are covered in the regulations with the exemption of government commitment, Mutsvangwa said.
She said the insurance industry was extensively engaged by the Insurance and Pensions Commission regarding the compensation framework in general and the sources of funding in particular, adding that public complaints pointed to lack of transparency in the manner in which their long-term contracts were converted from the ZWL$ to US$ in 2009.
In response to the public complaints, the government commissioned the Justice Smith Commission of Inquiry in 2015, which culminated in a detailed report which was submitted in 2017 and adopted by Cabinet in 2018.
In September 2018, the government then mandated IPEC to implement the recommendations of the Justice Smith Inquiry.
Mutsvangwa said significant progress has been registered in “implementing the recommendations, including the legislation governing insurance and private occupational pension funds which forms the backbone of an effective regulatory and supervisory framework, has been reviewed”.
“The Bills to amend the Insurance and Pensions Commission Act, the Pension and Provident Funds Act and Insurance Act are at different stages of consideration in Parliament. The amendment Bills will address all strategic deficiencies in the legal framework as identified by the Commission of Inquiry,” she said.
