The Insurance and Pensions Commission (IPEC) is pushing for reasonable compensation for the loss of value policyholders and pensioners suffered during the process of conversion of balances from Zimbabwe dollar to the United States dollar.
It is estimated that many Zimbabweans lost their investments totalling more than US$3bn during the conversion process, resulting in huge pension investments turned into a few cents or dollars.
IPEC Commissioner Grace Muradzikwa told industry players during a webinar meeting last week that there was a need for collective efforts to resolve the pre-2009 issue.
“We cannot justify our relevance when the average pension as at March is ZWL$14 929, which is equivalent to US$18. We are all going to be judged by how we address this issue,” Muradzikwa said.
She said it has become clear that the sector cannot move forward without addressing its past.
“We are being dragged back by an anchor, like a ship in a harbour that is unable to proceed any further,” Muradzikwa said.
Government has committed a US$175m towards compensation for the pre-2009 loss of value.
Muradzikwa thanked the government for the support to restore confidence in the insurance industry.
She said the industry is expected to avail funding to account for the money “entrusted to us by pension fund members and policyholders” adding it was now time for action and not “finger-pointing”.
Finance and Economic Development Minister, Mthuli Ncube said the failure to compensate pensioners for the losses that occurred pre-2009 will continue to dent confidence in the sector.
He said the legislation governing insurance and pensions was reviewed to incorporate the recommendations of the Commission of Inquiry set up in 2015 by former president, Robert Mugabe to probe the conversion process used in converting benefits following dollarisation of the economy in 2009.
The Commission was chaired by retired judge Justice George Smith.
Three bills—the Insurance Bill, Pension and Provident Bill, and IPEC Bill— are at various stages of enactment into law.
The Commission of Inquiry recommended institutional reforms such as the establishment of a Policyholder Protection Fund, and the strengthening of IPEC’s regulatory capacity, among other institutional reforms aimed at the public sector.
Muradzikwa said each fund is required to submit a compensation scheme within 90 days from the date the regulations become operational.
The scheme will include actuarial reports – cohorts of members to be compensated, compensation amounts, assumptions and amount from sources of funding.