Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mangudya has put up a task-force to engage pension companies on modalities to preserve value of pension funds following the conversion of all local deposits into RTGS dollars.
The move by the Central Bank to liberalize exchange rates meant that pensioners’ savings lost value as they were previously denominated in United States dollars.
Speaking at a Parliamentary Committee for Public Finances this morning, Mangudya said the bank was aware of the fears surrounding the value of pension funds and has thus set up a task-force that will ensure preservation of values.
“We have set a task-force to deal these issues and its engaging IPEC (Insurance and Pensions Commission) in meetings that we want to ensure pensioners benefit,” said Dr Mangudya.
While Mangudya failed to clearly assure pensioners that their funds will retain their USD value, he opted to blame weak production for the conversion of US Dollar deposits to local RTGS dollars citing that lack of formidable exports meant deposits were not backed up by reciprocating actual USD currency as the case soon after dollarization in 2009.
“When we dollarised in 2009, we had deposits of just about $ 1 billion and our US Dollars from exports far outstripped our deposits. So our deposits were diluted by US dollars but now its a different case, our RTGS grew to levels that can not match the US Dollars we have,” he said.
Mangudya has recently stated that the central bank has been assisting pension firms to purchase deposit receipts in foreign currency to preserve value of funds albeit at the Bank’s expense.
But this has left analysts skeptical of Central Bank’s drive, citing that exchange rate distortions draws away confidence.
In 2008, about $ 5.68 billion worth of Pension Funds was lost due to hyper-inflation, and since 2009, contributors have been rebuilding funds to the pension schemes in USD denominations which have seen been devalued following monetary policy changes.