The Insurance and Pensions Commission (IPEC) is ramping up its enforcement efforts against pension funds that have failed to meet the compensation scheme requirements set to address the losses incurred during the hyperinflation period of 2009.
At its annual general meeting last week, IPEC announced its decision to take legal action against 50 non-compliant pension funds.
Grace Muradzikwa, IPEC Commissioner, revealed that out of the 1,200 compensation schemes submitted for review, only one had met the requirements. “We received and reviewed 1,200 compensation schemes, against the expected 1,264. However, only one pension fund has been approved, with several others nearing compliance,” Muradzikwa said.
The directive, issued last year, required insurers and pension funds to submit their compensation schemes by December 31, 2023. These schemes aim to compensate policyholders for the significant losses they suffered during the 2009 hyperinflation crisis. The process, governed by Statutory Instrument (SI) 162 of 2023, has been fraught with challenges since its inception in 2017.
Muradzikwa cited several hurdles, including the lack of detailed data and proper actuarial assumptions. “The industry did not have sufficient data on the pensioners who are contributing, making it difficult to assess these compensation schemes accurately,” she explained. The IPEC’s review process was further complicated by the summarized nature of the reports and the absence of crucial asset separation details pre-2009.
Despite these obstacles, IPEC remains committed to ensuring that pensioners are adequately compensated. “We need to make sure that pensioners are compensated. We also have about 50 funds that did not submit any compensation schemes, and we have started taking them to court,” Muradzikwa stated.
The SI allows IPEC to pursue legal action against non-compliant pension schemes, a measure that has already been set in motion.
The compensation framework, designed to address valuation failures from the currency conversions during the hyperinflation period, includes using independent actuaries and specific financial metrics for calculations. Despite the challenges, this framework is expected to enhance the protection of policyholders and restore faith in Zimbabwe’s insurance and pension industry.
