Editorial Comment: Pension industry must spare a thought for contributors

Editorial Comment

LAST week, the pensions industry must have been very delighted to announce that it recorded a ZWL$620,1 million surplus for the year ended December 31, 2018, which was a 45% increase on the 2017 surplus of ZWL$426,4 million. Simple economics informs us that a surplus is the amount of an asset or resource that exceeds the portion that is utilised. A surplus is used to describe many excess assets, including income, profits, capital, and goods.

In this case, while a surplus may mean that the pensions industry is in very good health, these glad tidings may not be well-received by those who have, for decades, contributed through blood and sweat to the growth of this booming industry because they may, understandably, not comprehend or even appreciate what that surplus means when their pay-outs are peanuts.

Many pensioners, who have since passed away penniless and in miserable conditions, must be turning in their graves, while those still alive may be wondering why they ever decided to contribute towards pension schemes because the measly monthly pay-outs they are getting hardly reflect the massive surplus the pension industry is celebrating.

In January this year, the pensions regulator, the Insurance and Pensions Commission (Ipec), admitted thus: “It is true that the Justice Smith commission of inquiry found out that pensioners in Zimbabwe did not receive their dues in line with their reasonable expectations — and it is quite depressing because even we, as a commission, have been overwhelmed by complaints in this regard and the commission of inquiry recommended a compensatory framework.”

It then defies logic, given the miserable and dire state of the country’s pensioners, that the pensions industry still has the strength to declare that its total income of $989,5 million, for the period under review, was mainly driven by fair value gains on equities and contributions, accounting for a combined $714,88 million and 72,24% of total income.

Should all these gains being made by the pensions industry not also rub onto the people who have and are still contributing to the growth of this industry? Is it not a pity that not much of this surplus is helping improve the pensioners’ wellbeing?

In 2008, pensioners lost all their life-savings after the country dollarised when the just reintroduced Zimdollar was rendered valueless by runaway hyperinflation. And when the pensions industry regulator later told us that the World Bank was helping them with “technical assistance to provide guidance on how policyholders and pensioners, who were paying premiums and contributing from 2009 to 2019, will be compensated”, pensioners were elated, given that the country’s economy kept running rough-shod over them.

Despite the proposal having been mulled to assist Ipec solve the issue of policyholders and pensioners who, since 2009, contributed in US dollars and bank transfers following the introduction of bond notes and coins in 2016, nothing tangible has materialised.

All this is happening at a time when Ipec is telling us that the issue of contribution arrears is giving then sleepless nights, with some companies deducting contributions, but not remitting to pension funds. And ironically, those contribution arrears of ZWL$600 million, as at December 31, 2018, almost equal the surplus the industry reported during the same period. It’s high time the industry spared a thought for all those giving it a life.

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