Pension arrears hit $600 million

Phillimon Mhlanga

HARARE – Contribution arrears to pension funds have risen by nine percent to $600 million in the four months to June this year, from $550 million recorded in February, threatening the stability of the sector.

Josphat Kakwere, head of pensions at the Insurance and Pensions Commission (IPEC), confirmed the latest development saying non-remittance of pension contributions by companies have deprived members and their families of their entitlements in the event of retirement, death or other developments. These benefits can only be paid to beneficiaries whose contributions and premiums are up to date.

“Pension contributions arrears have gone up to about $600,31 million, accounting for 14,89 percent of total assets” Kakwere, who spoke at an insurance and pensions seminar in the capital on Tuesday, said. The meeting was organised by the Institute of Chartered Accountants of Zimbabwe and IPEC.

“Two things could be happening. One, it could be unwillingness to pay by companies and the other issue could be inability,” he added.

It is a criminal offence for companies to deduct pension contributions from employees’ salaries and wages but fail to remit them to the respective pension fund, according to IPEC.

The Pensions Regulations (Statutory instrument 323 of 1991 and 61 of 2014), stipulates that all sponsoring employers should remit contributions within 14 days after the end of each month to which the pension contribution relates.

But, many employers continue to deduct amounts from salaries or wages of their employees   and deliberately fail to pay such amounts to the relevant retirement funds.

Consequently, many non-compliant had been dragged to the courts. Defaulters are slapped with hefty penalties for non-remittance of contributions which include interests on the overdue contributions.

Kakwere said in the event that the company is proven to lack capacity to continue making contributions, the fund will continue to existence but will, not continue to deduct employee contribution until that deal with contribution arrears.

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