TAKUDZWA HILLARY CHIWANZA
Zimbabwean pensioners who saw their pension savings wiped out by hyperinflation between 2007 and 2009 will finally receive compensation starting from February 2024.
 |
| Image: Linda Mujuru/GPJ Zimbabwe |
This comes after the enactment of Statutory Instrument 162 of 2023 (Compensation for Loss of Pre-2009 Value of Pension Benefits Regulations) on September 29, 2023. The regulations became effective from October 1, 2023.
It follows the recommendations of the Justice Smith Commission of Inquiry, which was appointed in 2015 to investigate the conversion process of the Zimbabwe dollar to the multi-currency system in 2009.
The commission blamed the value erosion of pensions and insurance policies on poor regulatory enforcement and currency change, and called for fair compensation of the affected policyholders and pensioners.
However, the compensation process has been delayed for 14 years, amid economic challenges and legal disputes.
Many pensioners have complained that they only received as little as US$5 as their one-third lump-sum benefit after the demonetisation of the Zimbabwe dollar in 2015.
The Insurance and Pensions Commission (IPEC), the regulator of the pensions and insurance industry, has set a timeline for the compensation process, which is expected to be completed by June 2024.
“We expect you (pension funds) to submit your compensation plans within 90 days, and we commit to approve your submissions within 30 days if they meet our expectations. If they do not meet our expectations, we will give you seven days to address the issues. Failure to do that, penalties will come in,” said Mr Robson Mtangadura, the actuarial director of IPEC.
He was speaking at the Zimbabwe Association of Pension Funds (ZAPF) 4th edition of the Principal Officers and Chairpersons Convention in Bulawayo this week.
The compensation amount will be based on a prescribed interest rate of 3 percent per annum, compounded monthly, from February 2009 to September 2015.
This rate is higher than what the economy fell by in US dollar terms during that period, according to independent actuary Mr David Mureriwa.
He estimated that the total compensation for pensioners could amount to US$900 million using the prescribed rate, or US$3.98 billion using the Barclays Emerging Markets Index.
The compensation fund will be sourced from both the government and the pensions and insurance industry. The government has already committed US$175 million for the compensation of pensioners and insurance policyholders in July 2023.
Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube said that this amount will complement and work in tandem with funds that will be tabled by the industry.
Zimbabwe experienced a period of hyperinflation between 2007 and 2009, which reached a peak of 79.6 billion percent in November 2008.
The Reserve Bank of Zimbabwe (RBZ) issued a $100 trillion dollar note in January 2009, which was worth less than US$0.50 at that time.
The Zimbabwe dollar became worthless and unsustainable, and was replaced by a multi-currency system that mainly used the US dollar. The Zimbabwe dollar was eventually demonetised between June and September 2015.
0 Comments