Turmoil engulfs Zim pension industry
…..as hefty non-pensionable allowances crowds our sector
STAFF WRITER
Zimbabwe’s pensions industry has seen a severe downturn with the number of active pension funds falling to 482 from 985 in 2021, reflecting a more than 50% reduction, the Zimbabwe Insurance and Pensions Apex Council (ZIPAC) revealed yesterday.
The Zimbabwe Insurance and Pensions Apex Council (ZIPAC) vice chairman, Willie Chibaya said the sector has also been crowded out by non-pensionable allowances.
It comes at a time when local companies are providing hefty cost of living adjustment allowances to their employees to cushion them against hyperinflation . Their pension pots have been severely impacted by this, leaving a meaningless pensionable basic salary component.
Most cushioning allowances, which are not part of the regular basic pay and are non-pensionable, are higher than the basic salaries of employees which have remained almost the same.
This means an employee’s pension pot remains insignificant as there is no build-up for a rainy-day fund.
This also affects most pension funds as they cannot purchase meaningful fund assets that could track the rate of inflation.
“We have seen that the pensions industry is a shrinking sector. And the industry has made a submission to increase or cover non-pensionable allowances as part of deductions. Currently, there is no law for the private sector that extends coverable to non-pensionable allowances. The pensions industry has been crowded out by non-pensionable allowances,” Chibaya said.
The pension industry assets have also been declining. The industry has also experienced low consumer confidence, with the industry growth constrained due to legacy issues that have remained unresolved.
