IPEC to dissolve 350 pension funds

PHILLIMON MHLANGA

The Insurance and Pensions Commission (IPEC) will dissolve over 350 pension funds that have become inactive arising from the incapacity of sponsoring employers, Business Times can report.

The pensions sector has close to 980 registered funds.

The struggling sponsoring employers are finding it difficult  to resume contributions to the funds, leaving the funds financially unsound.

IPEC pensions manager, Tariro Muteisanwa, confirmed that work was underway to dissolve the troubled pension funds in line with the framework for Resolution of Troubled entities.

“IPEC is concerned that about 36% of registered funds are inactive with the majority having been inactive for an extended period, some dating back as 2009,” Muteisanwa said.

“We raised risk management considerations as it has become difficult to deal with corporate governance deficiencies affecting these funds as most no longer have a board of Trustees.”

She said it was also important to deter loss of value through continued costs or unjustified prolonged preservation of benefits and IPEC has issued dissolution guidelines.

“The directive gives criteria to be applied in deciding whether an inactive fund can be considered financially unsound. Fund administrators   have a duty to disclose all such funds that qualify for dissolution in line with defined criteria. We expect compliance with the directive read with the Act and circular 10 of 2019,” Muteisanwa said.

She said the existence of the troubled pension funds has become a threat to members’ values.

Section 19 of the Pensions and Provident Funds Act (Chapter 24: 09) empowers IPEC to dissolve a fund which is in an unsound financial position.