ZimPIRT

IPEC to dissolve 350 pension funds businesstimes.co.zw/ipec-to-dissol… Dissolution of 350 pension funds on grounds that they are funds in unsound financial contributions (Section 19 Pensions & Provident Funds Act) is too many. This decision directly proves incompetence in accordance with the same section 19, read together with Sections 10, 14 & 17. is in terms of these sections mandated to regularly competently assess the pension funds for financial soundness. 350 funds are unsound because of their incompetence.
The members of these pension funds and pensioners cannot be penalised for incompetence.
What’s worse, the definition of Section 19, ie “Fund in unsound financial condition” is opaque when compared to similar provisions of progressive jurisdictions. It gives too much latitude, but without corresponding responsibility and accountability. Such is the state of this Act of Parliament & the Pension & Provident Funds Amendment Bill, recently passed to the Senate. Any members of these 350 funds must appeal in order that this decision is set aside

Rating social security in Zimbabwe

Several members of the public have approached Zimbabwe Pensions & Insurance Rights Trust (ZimPIRT for advice on various issues of pensions and insurance. A more recent peculiar inquiry has been about which products and services in pensions & insurance service provision (or social security system) one can invest in with safety equal to similar investments in the EU or US. ZimPIRT has responded that in Zimbabwe the entire social security system has for the past 30 years been defaulting on its obligations to contributors, despite that the contributors would have faithfully contributed as contractually & legally required. ZimPIRT has irrefutably established that this is the case. With a membership of 6,000+, each with an average contribution/membership period of 25 years, ZimPIRT established that pension funds and insurance companies are casually refusing to honour on their obligations. A commission of inquiry set up by Zimbabwe Gvt at the behest of ZimPIRT in 2015 to determine prejudice & compensation thereof would not be conclusive. Meddling with the inquiry by Gvt officials would be reported. Gvt itself would be implicated in protecting pension funds and insurance companies from the dire consequences they face over this default. Evidence is now emerging that Zimbabwe Gvt was bribed by insurance companies in various ways into not holding pension funds and insurance companies to account. Senior officers at the regulatory authority Insurance and Pensions Commission (IPEC) are publicly known to have worked as executives of insurance companies for a long time, prejudicing large numbers of pensioners and pension fund members of pension funds and insurance policies they administered and underwrite. Their interests are evidently not aligned to the regulatory interest and are to suppress any pensioner compensation and default on obligations to pension fund members pensioners alike. Regulation of pension and insurance service provision is therefore permissive with regards accounting of pension and insurance funds, with regards their solvency, their investments & investment management, benefit indexing and record keeping. Long time investors in pension funds and insurance policies have resorted to taking various parties to court to have their rightful benefits honoured. Court class actions are on the cards. As a result of the impunity with which pension funds, insurance companies and Gvt have defaulted on obligations to contributors, any monies invested in the social security system is certain to be lost as soon as the investment is made. In consequence all social security investment (NSSA, private occupational pension funds, insurance, etc) is categorically high risk, and not worth trying. No social security investment in Zimbabwe is anywhere near the equivalently EU’s A1 Certificate or the US’s Certificate of Coverage. Those Zimbabweans seeking to cover themselves in old age or other adversities of life would, for the time being, have to seek such coverage in the EU or US.

Fundamental flaws in the IPEC Amendment Bill
The report “Move to cushion pensioners, insurance policyholders” (Herald) reports that the Insurance and Pensions Amendment Bill seeks to establish a Policyholder and Pensions and Provident Fund Members Protection Fund, among other things. In rather sweeping statements, it is reported that the Fund serves as Government objective to instil confidence in the insurance and pensions industry. This will be ensured as “.. the Fund will protect policyholders in the event that insurance companies go under”.
This report comes as Veritas has already condemned the Insurance and Pensions Commission (IPEC) Amendment Bill overall as inaccurately drafted. It is Zimbabwe Pensions and Insurance Rights Trust (ZimPIRT) submission that the IPEC Amendment Bill is not explicitly provided for with regards to the following;
 Objectives of the Commission (Section 3) - without provision of the established objectives of pensions and insurance service provision
 Any accountabilities
 Section 4 (Functions and powers of Commission) – without any reference to the typical functions of a pension and insurance regulator
 Section 5 (Board of Commission) – without any basis or rationale for this term
It is apparent that this IPEC Amendment Bill is drafted in alignment with the Pension and Provident Funds Bill, gazetted in 2020, by and large being arbitrary and divisive in its governance provisions. The Pension and Provident Funds Bill had on six occasions (over the past seven years) been rejected by pensioners as the key stakeholders. It was again hotly contested by pensioners, in a Parliament-held National Consultation in April 2021, after it was gazetted behind pensioner’s backs. The Parliamentary Portfolio Committee on Finance and Economic Development would agree to submissions made by Pensioners through ZimPIRT to be incorporated in this 2020 gazetted Bill. Strangely, the Bill would be passed to the Senate without the pensioner-submitted amendments. Pensioners needless to say have petitioned Parliament of Zimbabwe to reconsider this Pension and Provident Funds Bill, with objective of incorporating pensioner submitted provisions. It has in this petition requested Parliament for a) the IPEC Board be revised to equitably incorporate pensioners as stakeholders in order that their interests are served and b) the IPEC Amendment Bill be revised with these interests as a key consideration.
The IPEC drafted Bills (IPEC Amendment Bill, Insurance Bill and the Pension and Provident Funds Bill) invariably have to be publicly contested by pensioners (as the key stakeholders), because IPEC strangely and consistently excludes the stakeholders in drafting of the Bills. In so excluding the stakeholders, IPEC has over the past ten years insisted on providing for wrong governance of pension and insurance funds, and hence for permissive regulation and supervision of pension and insurance service provision in Zimbabwe, and on prescribing wrong benefits calculations due from pension and insurance arrangements. The insistence on apportioning absolute powers, without proportionate responsibility, and the prominence or prevalence of these provisions in the Bills, coupled with the persistent strategy to exclude stakeholders, is suggestive of a regulator (IPEC), which is not transparent nor fair, and with a hidden agenda. In particular the insistence in the IPEC Bill on the provision of arbitrary and implicit objectives of the Commission, for example (Section 3), the arbitrary powers to accredit actuaries, auditors, asset managers, credit rating agencies and other service providers; (Section 4 on Functions and Powers of the Commission); the repealing of subsection (3) and substitution by the following “(3) The persons appointed under subsection (2)(b) shall be chosen for their qualification, knowledge and experience in insurance and pension matters actuarial, legal, finance, human resources management, information technology, or related fields of expertise.”
The bestowment of such absolute power to the Commission and this Commission’s function to appoint and/or accredit actuaries, specifically, without proportionate Commission responsibility is much too common in the three Bills to be a mere erroneous coincidence. Clause 49 of the Pension and Provident Fund Bill for instance specifically requires an actuary appointed by the Commission, effectively to use pension benefit calculation methods used in 2009 that led to a pensioner national outcry, and subsequently to an investigation 2012, and to the Justice Smith Commission of Inquiry. Clearly it took laymen such as pensioners to see that there was something wrong with the method. The Justice Smith Inquiry report condemned this pension benefit calculation method and recommended compensation.
The insistence by IPEC to provide for this wrong pension benefit calculation method provides a clue to the answer why IPEC consistently excludes pensioners as a key stakeholders:- either IPEC is, in self-interest, set on pushing the Bills past stakeholders into an unjust law that will prejudice pensioners, and/or the errant actuaries involved in pension benefit calculations in 2009 have been tasked by IPEC behind the scenes to draft the Bills. The involvement of actuaries responsible for 2009 benefit calculations in drafting of the Bills is a most plausible answer for the following reasons; firstly IPEC has not got the skills, and secondly because the actuaries would only be too keen to cover their tracks and avoid consequences, in the process continuing to earn money for undeserving job. There are a precious tiny few, countable actuaries who were practising as at 2009. Until 2009, these actuaries had taken full advantage of the common man’s lack of understanding of actuarial matters, and misled the pension and insurance industry into the chaos that it is now. It is apparent that they are using corruption to maintain the chaotic status quo.
With regards the Policyholder and Pensions and Provident Fund Members Protection Fund, it is grossly ill-defined with regards to its membership, how it should be funded, how it will benefit members and how it will be managed. Typically, such protection pension funds pay compensation to members of eligible defined benefit pension schemes, when there is a qualifying insolvency event in relation to the employer and where there are insufficient assets in the pension scheme to cover Pension Protection Fund levels of compensation. A scheme may be eligible if its sponsoring employer has experienced an insolvency event and the defined benefit scheme is underfunded to a specified level. When the sponsoring employer of an eligible pension scheme becomes insolvent, the protection fund seeks to find the solution that’s best for its members and the protection fund.
Providing for the protection fund under the IPEC Amendment Bill is clearly inappropriate, the Pension and Provident Funds Bill being the correct enabling Bill. Secondly the provisions introducing this protection Fund are all encompassing involving life assurance funds, with different qualifying insolvency events, and clearly not providing for these events.