The ManicaPost
Ray Bande Senior Reporter
PENSION funds are not be oblidged to disburse benefits to members using the USD or interbank rate but will be required to revalue their assets and benefits that pensioners are paid in local currency, the Insurance and Pensions Commission (IPEC) has said.
The Insurance and pensions regulator said it was impossible for pension funds to pay benefits using the interbank rate, given that there are other factors that determine the revaluation of assets.
There has been confusion and discontentment among workers in different organisations whose pension funds are disbursing benefits on whether they are entitled to benefits that are rated against the prevailing USD interbank rate on disbursement.
In a response to questions from The Manica Post, IPEC Director Pensions Department Mr Josphat Kakwere said Statutory Instrument 33 of 2019, equated all monetary instruments, which were previously in USD at 1:1 with RTGS, which makes it impossible then to rate such pension values using the interbank rate.
“It is not possible for pension funds to use the interbank rate in paying benefits because there are other factors that determine the revaluation of assets.
“Statutory Instrument 33 of 2019, equated all monetary instruments, which were previously in USD at 1:1 with RTGS, which makes it impossible then to rate such pension values using the interbank rate.
“In addition, benefits payable depend on the value of assets. If the assets revaluation does not match the interbank rate, it makes it difficult for the pension funds to pay using the interbank rate,” Mr Kakwere said.
IPEC is a statutory body established with the objective of protecting Insurance policyholders and Pension fund members
Mr Kakwere further clarified the payment modalities of benefits after dissolution saying
“Members will be paid their benefits using the prevailing currency. However, these benefits like other incomes, will be adversely affected by the obtaining inflation in the economy.
“Pension funds will need to revalue their assets from USD to ZWL. Once they have revalued the assets, they will also need to revalue the liabilities, which are the benefits that members will be entitled to,” he said.
Mr Kakwere further noted that real value will be lost in benefits for pensioners but the regulatory body is working on measures to ensure that the interest of the pensioners are also protected.
“Under an inflationary environment depending on the extent of the assets one holds, real value will be lost. If the assets one is holding do not give a return or cannot revalue to match the rate of inflation, then there will be loss of value.
“The Commission is, however, engaging the pensions industry to ensure that members are treated fairly and their loss is minimised. There is a guidance that the Commission will be issuing to the industry, once the ongoing consultations are concluded.
“The Commission learnt from the 2009 experience and is doing everything it can, to protect the interests of members. Measures are being put in place to ensure that members get fair value, though I am not at liberty to disclose the measures, given that there are ongoing consultations. Consultations are ongoing and the public will be advised of the way forward, once the processes are complete,” he said.
