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Actuarial calculations cause disquiet


NewsDay has published several articles on the possible part played by the Insurance and Pensions Commission (IPEC), as regulator of insurance and pensions industries, and that of the management of insurance companies, in causing the disquiet about the low pensions and insurance values entitled to pensioners and policyholders.

Categorical statements have been made in these articles about conflicting interests of insurance company executives who sit on the IPEC board and those public interests on pension and insurance benefits due to pension fund members and insurance policyholders.

The latter have registered their unhappiness with low pension benefits they receive from insurance companies. IPEC and the management of insurance companies have on the other hand not risen to the challenge to prove their innocence in the face of the public charge the low pension and insurance benefits are wrong and an attempt to swindle pensioners.

Instances of conflicts of interest, lack of transparency and accountability, such as highlighted above in the management of the current pension disgruntlement, are diametrically opposed to principles and best practices of good corporate governance.

The said NewsDay articles have charged IPEC may be flagrantly breaching best practices of good corporate governance.

In particular, the articles have charged that representation in the IPEC board is not balanced, being tipped in favour of insurance executive interests to maximise their takings from the public.

There is, therefore, everything wrong with the governance of pensions and insurance industries if most of the IPEC board members, and hence regulators, are insurance company executives that manage pensions and policies for the public in their private businesses.

There would, for instance, be nothing to stop such an IPEC board, composed mainly of these executives, from using the their positions as regulators, to cover up for suspect low pension benefits they as private business managers entitle pensioners, and there would be no other overseer to hold them to account.

Very curiously, IPEC has neither confirmed nor refuted this charge its board is composed mainly of insurance executives, including some of the few actuaries practising in Zimbabwe.

If the blind dependency of the pensions and insurance industries on the few actuaries, discussed in the articles, is in fact reality, actuaries that sit on the IPEC board could be having a field day manipulating this board.

Undeterred by this unquestioning dependency, hands of some of these actuaries are known to be in every facet of pensions and insurance management from regulator level, to insurance business’ micromanagement.

In fact, it appears they have made it out to authorities, that only actuaries can do anything in the pensions and insurance industries. Their exploit to convert Zimbabwe dollar pensioner fund accounts to US dollar-denominated pension accounts and to make it like a preserve of actuaries confirms their campaign.

Foreign currency conversion is a simple arithmetic exercise informal foreign exchange traders did accurately in the streets.

However, being accustomed to taking the IPEC board for granted, they appear to have failed to apply due competence and produced US$ pension values that failed to appeal to public common sense of accounting. Notwithstanding, they still succeeded to coerce the regulator and the insurance companies into accepting, without question, the low pension values pensioners are now unhappy with. It is fair to conclude the actuaries are not keen on a debate to establish whether or not their values are correct. They will, therefore, use their influence in the IPEC board to frustrate an investigation of the correctness of the disappointing pension values and hence of their workmanship.

Their underlying proposition that only them should be allowed to spearhead discussions on things pensions, insurance and “actuarial”, translate to a proposition that the suspect pension values should not, and cannot be investigated by anyone who does not hold the certificate of an actuary.

They would like to have this country believe that no reasonably priced local expertise can independently investigate and verify the correctness or otherwise of the disappointing pension values, as the few actuaries were all involved in calculating the disappointing values — the investigation can only therefore be done by foreign expertise, and only at an inordinate cost, which no doubt the pensioner will end up paying for. The objective is to force the authorities to abandon an enquiry.

When that happens, the disappointing pension values will be covered up and forced down pensioner throats, and nothing will then change the monopoly unfettered manner in which they operate.

It is advisable for the authorities to ensure this investigation is done, and the investigation must of necessity, be extended to the other work that the few actuaries did and with a direct effect on the disappointing pension values.

Apart from rejuvenating the pensions and insurance industries, this investigation will prevent future national disappointments. The simple arithmetic conversion process to US$ pension values does not need a foreign expert. With regard to the other wrong things that the actuaries may have done, leading to suspect pension values, local expertise abounds if the net is cast wide enough and if the merits of their arguments are considered without overplaying whether or not someone holds the certificate of actuary.

•Martin Tarusenga is board member of Zimbabwe Pensions and Insurance Rights
Telephone; +263 (0)4 883057; Mobile; +263 (0)772 889 716

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