FOR many workers, retirement is a time to relax and enjoy the fruits of their labour.
But for some retired employees in Zimbabwe, it has been a time of destitution and despair, thanks to companies deducting money from their salaries for pension contributions but failing to remit them to the respective pension funds.
This issue has been a long-standing problem in the country, where some companies have been accused of using employee pension contributions for their own purposes, leaving workers who have retired with little or no pension benefits.
One such affected worker is Tendai Moyo, who worked for a local manufacturing company for over 30 years. According to Moyo, the company deducted a portion of her salary for pension contributions, but when she retired, she was shocked to learn that the money had not been remitted to the pension fund.
"It was a rude awakening for me," she said. "I had no idea that the company was not remitting my pension contributions. I trusted them to do the right thing, but they let me down."
Moyo is not alone in this predicament. Many other retired workers are struggling to make ends meet; having been cheated out of the pension funds they were promised. Some are even forced to work well into their 70s and 80s, just to make ends meet.
“We have big companies like Vumbachikwe, Rio Zim who have been deducting money but failing to remit. Workers who retired from Shabane Mashaba and Hwange Colliery are living in poverty because the companies failed to remit their pension,” said Justice Chinhema, secretary general of the Zimbabwe Diamond and Allied Minerals Workers Union.
“Besides the pension being little, it was not remitted. Mining Industry Pension Fund (MIPF) is a useless administrator of pension; it should design a legal framework that compels defaulters to be garnished like what NSSA does. It seems the trustees are benefiting from the defaulting parties through corruption.”
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Professionals and General Mine Workers Union of Zimbabwe president, Abraham Kavalanjila said they had taken some of the companies to court for failing to remit the money deducted from workers’ salaries.
“It is fraud to deduct such monies and not remit them. It affects a lot of employees after their retirement or when they need healthy assistance. We advise all employees to check if their funds are remitted,” Kavalanjila said.
“We will leave no stone unturned over such behaviour. We are giving a strong warning to such employers to correct their mess. Once we discover that they are robbing workers, we will not hesitate to take them to the court of law.”
The Insurance and Pensions Commission (Ipec) has been vocal about this issue, calling on companies to comply with the law and remit the funds they deduct from their employees' salaries.
According to Ipec, the investment return on those contributions is significant, and employees should be aware of the amount they have saved for retirement.
"If you don't know what's in your port, that's a weakness on your part in terms of retirement planning," said Ipec director pensions, Cuthbert Munjoma during the second edition of journalists mentorship programme.
“It's actually illegal to deduct pension contributions and then not remit them. The new act which came into force on the 2nd of September 2022 actually places criminal liability on those that would have done so."
Companies in Zimbabwe failed to pay pension contributions of $26,21 billion to the appropriate pension funds in the ten months leading up to December 31, 2022, a 395% increase from $5,3 billion in March 2022.
From the $26,21 billion, stand-alone self-administered funds contributed $19,8 billion, while self-administered funds had $4,55 billion, according to official statistics received from Ipec. The balance was supplied by insured funds.
As such, Ipec recently named and shamed 50 entities dominating the pension contribution arrears chart, in terms of value.
In order to compel sponsoring employers to make contributions, Ipec has suggested tightening the Pension and Provident Funds Bill. Parliament is currently debating the Bill.
Chief executive officers and finance directors of companies that deduct pension contributions but do not remit such to respective pension funds may face civil and criminal penalties in their individual capacities if the Bill is signed into law.
Ipec regulates about 977 registered pension funds. Of these, 568 are active, while 409 are inactive as they are either paid up or undergoing dissolution.
“So, the same applies even for pensions. You don't need to get to 65 years to know what is in your port. Today, right now, you should actually know how much is in your port if you're contributing to the pension scheme,” Munjoma added.
He said as a last resort, Ipec has been given powers to garnish the bank accounts of the employers in favour of the fund.
“So, again, we can use that, but as a last resort. Otherwise, we should expect a functional system where if contributions are deducted then they are remitted."
In the meantime, workers like Moyo are left to pick up the pieces of their shattered retirement plans. They have to rely on the kindness of friends and family to survive, with little hope for their golden years.
It's a tragic situation that highlights the need for companies to act responsibly and comply with the law, lest they leave more workers destitute in their old age.