Pensioners confront minister

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Industry and Commerce minister Welshman Ncube learnt on World Consumer Day Thursday April 21 2011, that the disgruntlement over low pension and insurance policy entitlements eked out by insurance companies and pension funds is far from over.

Ncube was standing in for Finance minister Tendai Biti, on an event organised by the Consumer Council of Zimbabwe, when consumers presented him with the following questions;

Minister, I am sure you are aware of the disappointments, dissatisfaction and frustration that consumers are suffering with pensions and insurance entitlements having invested a lot of money for many years.

I am sure you are also aware or conscious that insurance companies and pensions funds have essentially been quiet on this issue, when they are expected to reasonably meet consumer expectations regarding their investment in the sectors.

Your Ministry, as represented by the Commissioner of Insurance and Pensions Commission (IPEC), and whose key role is to protect consumers of such insurance and pension financial services, has also been quiet about this crisis two years down the line.

Is there any reason why your commissioner has not acted responsibly to protect consumers from an apparently unaccountable insurance and pensions management?

Given the very long time that has elapsed, with no action, is your IPEC sufficiently competent to so act and protect consumers and thereby preventing both current and future similar crises?

Honourable minister — the Insurance Act and the Pensions and Provident Fund Act, which serve to regulate and supervise the insurance and pensions sectors, in order to protect consumers of pensions and insurance services, were last reviewed many years ago, in fact prior to independence of this country.

The two Acts have been, as I am sure you are aware, completely ineffective in protecting consumers and totally out of touch with modern strategies to protect consumers of insurance and pensions services, used elsewhere in progressive economies.

Honourable Minister — when are these Acts likely to be reviewed to introduce effective instruments that protect consumers, and how much do you think the consumers would have lost through potential mismanagement as enabled by loopholes in the two Acts?

Is your Ministry represented by the commissioner adequately and competently resourced to undertake, direct and implement such a review of the Acts?

Finally Honourable minister, the administering of the two Acts by your commissioner is provided for by the Insurance and Pensions Commissions Act (Chapter 24:21) (Act No 7 of 2000). This latter Act provides for a board of directors to help your commissioner regulate and supervise the pensions and insurance sectors.

The Act is not specific on the representation and inclusivity of this board considering the many stakeholders to the two sectors. In particular it is not specific about consumer representation and worker representation.

Reliable information has it that the IPEC board is lined up with insurance and pensions management executives, with some of these executives doubling up as actuarial consultants serving to calculate pensions and insurance entitlements for consumers, there is no consumer or worker representation.

Essentially therefore the insurance and pensions executives regulate and supervise the work they do as supervisee players, a serious instance of conflict of interests and breach of good corporate governance, especially if your commissioner is not skilled and competent in matters insurance and pensions.

Could this be the reason why the insurance companies and pension funds have to date succeeded to suppress this crisis Honourable minister?

When can consumers expect a correction of this potentially corrupt management structure?”
The banking sector was not spared as it was subjected to a similar line of questioning — but due to limited space, this discussion will focus on concerns raised by consumers regarding the pensions and insurance crisis.

Taking due cognisance of the part that inflation could have played, the minister took no time in conceding ignorance in how these issues were being tackled by his counterpart, the Finance minister. He solemnly undertook to pass on the consumer requests to his counterpart.

Nevertheless, the minister expressed visible surprise that there were such wide management gaps at this macro level.

A closer analysis of the motivation behind this line of questioning suggests that the consumer group had underlying background information about the management of pensions and insurance sectors that clearly made them unhappy.

The insurance and pensions sectors are exposed to serious risks if the suggested inefficient modus operandi of the sectors is confirmed by the Finance minister.

While the question of low disposable income may be dissuading growth of the two sectors, the consumer and general public confidence crunch in the two sectors may on the other hand corroborate the reality of the said risks.

The intermediation role of the two sectors will be permanently compromised if the modus operandi is not reviewed urgently, in turn economic growth that is ascribed to a vibrant pensions and insurance sector will be gone.

The Finance minister is advised to act urgently. On their part the consumers undertook to follow up with the Ministry.