‘Pensioners, insurance holders lost quadrillions during dollarisation’

PENSIONERS and insurance holders lost quadrillions of their Zimbabwean dollar investments during the process of conversion of the Zimbabwe dollar to the United States currency, Parliament heard on Monday.

BY KUDZAI MUCHENJEKWA

The issue was revealed by the Commission of Inquiry into the Conversion of Insurance and Pension Values from the Zimbabwe dollar to the United States dollar, which said most of their Zimbabwean dollar investments suddenly turned into a few US cents or dollars.

The commission, chaired by Justice Leslie George Smith, had appeared before the Parliamentary Portfolio Committee on Finance to speak on their findings.

Commissioner Godfrey Kanyenze told the committee that their investigations covered a 20-year period from 1996 to 2015, examining the regulatory, financial and governance affairs of 11 life insurance companies, nine funeral insurers, four independent pension administrators, 15 stand-alone pension funds, the National Social Security Authority, the Government Pension Agency and the Insurance and Pensions Commission.

Kanyenze said the commission conducted public hearings in all provinces in the country from 2015 to 2016, where they received complaints from members of the public, and insurance and pension organisations.

“The inquiry revealed that loss of value in insurance and pension benefits mainly occurred before the conversion from the ZW$ to US$ and dollarisation only revealed the extent of the loss,” he said.

“The exchange rate of US$1 to ZW$35 quadrillion, which was used when the ZW$ currency was de-monetised in 2015, prejudiced insurance policy holders and pensioners, and it reduced the already worthless ZW$ values that had been deposited in individuals’ bank accounts to just a few US cents, or at a maximum, US$5,” he said.

MPs from the committee, led by David Chapfika, said there was need for the issue to be followed up because it affected a majority of Zimbabweans.

Some of the factors which were said to have caused the loss were macro-economic such as inflation, currency de-basing, and the exchange rate used during de-monetisation of Zimbabwe dollar to US dollar in 2015.

Other factors were said to be negative real investment returns on fixed income securities such as bonds, Treasury Bills and money-market instruments which resulted in loss of value resulting in insurance companies and pension funds divesting from such investments during the period 2001 to 2008.

“The removal of 25 zeros (currency de-basing) during the period 2006 to February 2009 resulted in insurance companies and pension funds technically extinguishing their obligations to policy-holders and pensioners without any actual payments being made.”

They said after the removal of the zeros this resulted in abnormally low ZW$ benefit values which, upon conversion to US$ were for some pensioners as low as US$0,05, and in most cases zero, despite years of people contributing to pension funds.

8 Comments

  1. Comment…Today, the lateLawrence Simbarashe is to be buried after being a pauper in his last days because of hyperinflation. Yeah, a whole generation is suffering.

  2. DomboraMwari

    the value of pensions did not lose value at the point of conversation. but the values had long lost value before dollarisation. people accepted that their salaries were affected by inflation, how on earth do they think the pension contributions should have maintained value as if they were not zim dollars. ask all pensioners who retired shortly before dollarisation they will tell you that with their lump sums they could not even buy a goat. contrally to public opinion dollarisation actually retained a sense of value to pensions. THEREFORE PENSIONERS LOST MONEY TO INFLATION NOT TO INSURANCE AND PENSION FUNDS. INSURANCE COMPANIES SHOULD NOT BE HELD ACCOUNTABLE TO THE LOSE OF VALUE BECAUSE THATS BEYOND THEIR DURISDICTION.

  3. Domboramwari i agree with you. The main culprit here are not insurance companies but this blinking idiot called Gideon Gono. He was the father of inflation, a man who practised bush economics and in the process he destroyed the country. We are in this mess all because of this fool who should not hold any public office of responsibility

  4. mbwa dzevanhu

    Pensioners and insurance policyholders lost their savings because insurance companies got the calculations completely wrong, mismanaged pension and insurance funds by overcharging, essentially dipping into what is not theirs – this is has irrefutably been established. Many pensioners and policyholders contributed much earlier than the era of inflation (from about 2000), with many as early the late 1970s and early 1980s. Exactly, how does inflation wipe out investments professionally designed to meet pension benefits. Didn’t insurance companies undertake to professionally manage various risks that face pension funds including inflation. Why are they going back on their word now?

  5. Comment…SO?????????????????????????

  6. Comment…SO????????????????????????????

  7. Comment…SO?????????

  8. WHERE IS THE LOST VALUE WHEN THE CONTRIBUTIONS WERE INVESTED IN PROPERTIES & SHARE HOLDING OF ESTABLISHED COMPANIES WHICH STILL EXIST? WHAT WAS THE PROPORTIONS OF WHERE THEIR INVESTMENTS WERE TO CAUSE LOSS OF VALUE OR GAIN?

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