Zimbabwe’s pension funds want the government to allow them to invest a portion of their assets offshore as part of efforts to preserve value, Business Times can report.
The call comes after policyholders suffered massive loss of value during the hyperinflation period between 2006 and 2009.
According to the Justice Smith report, policyholders lost about US$3bn during the conversion from Zimbabwe dollar to foreign currency.
Policyholders have also suffered another loss of value after the government re-introduced the Zimbabwe dollar last year in June.
Zimbabwe Association of Pension Funds director-general Sandra Sevenzo told Business Times that policyholders are exposed because there were limited investment opportunities in the country.
“We have limited investment classes available for pension funds locally. Hence there is need for a development of products that are capable of preserving value like allowing a certain percentage of pension fund assets to be invested offshore through legislation,” she said.
Sevenzo, who spoke at the Securities and Exchange Commission of Zimbabwe strategy workshop held in the capital, also bemoaned government’s policy inconsistency especially on the Zimbabwe Stock Exchange (ZSE).
Government suspended trading on ZSE in June this year.
It lifted the ban in August.
The suspension of trading on ZSE dealt a fatal blow to insurance and pension funds, Sevenzo said.
“The suspension of ZSE dealt the pension funds a strong blow which it will take time to recover and the further suspension of Old Mutual and PPC on the ZSE has affected over 35,000 policyholders causing serious turbulences in the industry as Old Mutual is a big player in the industry.
“The suspension of the two has not only affected the insurance and pensions sector but the economy as a whole as the diversified has a strong impact on the local economy,” Sevenzo said.
Sevenzo said pension funds may fail to raise funds for benefit payments due to these sudden policy changes and further valuation of pension fund assets.
Life Offices Association of Zimbabwe secretary general Mavukeni Rufai, who also spoke at the meeting, said the industry has to come up with an investor protection fund.
“Investor protection funds must be advertised and ensure adequate knowledge of its existence given the collapse of few asset managers for example Kingdom and Infinity and pension funds have been negatively affected,” Rufai said.
He said IPEC should protect the industry in private equity investments to encourage asset managers to have private equity unit trust funds which then invest into private opportunities under some form of regulation from SECZ.