THE pensions industry must deal with a myriad of challenges as it strives for sustainable long-term returns in the midst of an uncertain environment, the Zimbabwe Association of Pension Funds (ZAPF) has said.
The current realities the industry is facing include unsound valuations, unsound valuations, low expected returns, historically low-real interest rates, and other economic pressures.
This is coming at a time the industry is also facing confidence issues following years of unresolved pensions value losses due to hyperinflation.
The Justice Smith Commission which made compensation recommendations for the sector among other things is yet to be implemented with a number of challenges also standing in the way.
In her opening remarks at the associations' 48th AGM and conference in Victoria Falls yesterday, ZAPF chairperson Rutendo Magorimbo said there was need for the industry to introspect on such challenges and brainstorm on solutions to be implemented.
"Considering the repercussions of the global pandemic and ongoing health crisis on retirement systems, our leading theme for the conference will be “Digital Transformation- The future of pension funds.”
“While we strive for sustainable long-term returns, we must also deal with the current realities of unsound valuations, low expected returns, historically low-real interest rates, and other economic pressures," she said.
Magorimbo added that it was topical for the industry to have a serious conversation on how to regain the industry’s confidence, given the many economic shocks and loss of value cycles experienced by the industry's contributing members.
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She said restoring confidence in the industry would help pave the way for extensive development that is much needed in Zimbabwe.
"Our three fundamental areas of interest in sector growth, confidence rebuilding, and regulatory compliance all hang on the Ministry of finances' handling of policy issues,” she said.
While the operational soundness and long-term sustainability of the Industry was a key focus area for the regulator, Insurance and Pensions Commission, Magorimbo said pension fund trustees, administrators, insurers and contributing members, should be committed to developing a shared vision that contributes to the economy’s growth and attainment of national objectives.
"We must also have a very strong appreciation for digital transformation. Not engaging or adapting will just make us strangers and spectators to greatness now and in the future. We need to take a leadership role in how Zimbabwe emerges from the disruption and loss suffered during the period leading up to the hyperinflation era of 2007/2008, the unintended consequences of the 2019 currency reforms on the long-term savings culture,” she said.
Magorimbo added that there was need for a collective mind-set change and a collaborative approach where businesses, government and contributing society each come together to do their part to not only rebuild but also ensure that we are better prepared to withstand any economic shocks that may impact us in the future.
"If we are blessed enough to live to age 60 and beyond - then retirement shall come. It is therefore up to us to create the retirement outcomes that we would want to see- that is an income and a retirement in a city or town with basic working amenities- roads, running water, uninterrupted power supply and availability of health facilities,” she added.