The total value of unclaimed pension pots in Zimbabwe has risen 626% to nearly ZWL$200m in the last 12 months to December 31,2020 from ZWL$27m in June last year largely due to lack of knowledge on the part of pension scheme members.
Another reason for the low take up of benefits could be a result of poor record-keeping by the pension funds themselves or outdated records, which makes it difficult for the pension funds to trace the members.
Official data obtained from the Insurance and Pensions Commission (IPEC) shows that at least 153 000 pensioners are owed money and living in poverty because they have not been able to claim the vital benefits they are entitle to in retirement.
This represents a 206% increase in the number of pensioners who failed to claim their benefits from an estimated 50 000 pensioners in June last year.
The number is destined to go higher because there seem to be little effort among pension funds administrators to track down beneficiaries of unclaimed pensions. This could be so because as long as the funds remain unclaimed, the administrators continue to earn hefty fees year after year.
This has left millions of dollars belonging to thousands of employees and their families who left their jobs unaware that they had unclaimed pension benefits owed to them, go unclaimed.
This means the affected pensioners could be living in poverty while unaware they are entitled to money that they have not claimed from their pension funds for years. This could have lost value due to hyperinflation Zimbabwe is experiencing.
IPEC commissioner, Grace Muradzikwa, described the situation as worrisome.
“The Commission is concerned that pension funds are holding on to ZWL$196m in unclaimed benefits, which speaks to the importance of keeping good databases,” Muradzikwa said adding: “This is quite a challenge and worrisome.”
A member of the national employment council for the clothing industry, Mehluli Moyo, told Business Times that it was important for employers to sensitise their employees that they were entitled to pensions when they leave employment on retirement or contribution refunds when they resign before reaching retirement age.
“Every month, employees gave up a portion of their earnings in order to provide themselves and their families when they retire. We want everyone to claim what they are entitled to. But, their hopes have been dashed as many have not been paid the pensions that they are owed,”Moyo told Business Times.
He added: “Employees should be sensitised on the matter so that they can claim their vital benefits because many are unaware that that they are members of retirement funds and are not aware of benefits owing to them. It’s unfortunate that members of retirement funds are not kept up to date on the state of their funds. Some members are also to blame because they don’t inform their dependents they had benefits owing to them. It’s critical that members of pensions fund open up and inform dependents about their retirement funds.”
The development comes at a time when several pension funds have applied for dissolution.
According to IPEC, nearly 30 pension funds have applied for dissolution in the last few months.
Most sponsoring employers are also failing to remit contributions deducted from employees’ salaries to pension funds threatening the viability of pension funds.
A Chitungwiza pensioner, Mirirai Kaseke told Business Times: “I left employment about six years ago and I am struggling to make ends meet.
Although I have been contributing for the whole of my working life, I have missed out on money in pension benefits I am entitled to. I changed about four jobs, meaning I contributed to four pension funds but I have failed to track the benefits down which I should be receiving. This (pension benefits) could help enormously.”
It is understood that unclaimed pension benefits are kept at the pension funds for five years, and then after transferred to a “Guardian Fund” awaiting for an eventual claim from the policy holder or any authorised person.
In the event that they remain unclaimed in the guardian fund, the funds are then forfeited to the State for use in national development projects.
Muradzikwa urged pension funds to maintain accurate membership data and contact details of all its members for easy tracking.