Firms in $887m pension contribution arrears

LOCAL companies have failed to remit at least $887 million in employee pension contributions to pension funds between January to June this year while an estimated $196 million of unclaimed pension benefits are lying idle as members fail to claim their dues owing to a number of reasons.

Pensions and Insurance Commission of Zimbabwe (IPEC) Commissioner, Dr Grace Muradzikwa, revealed this during a virtual media conference on Tuesday.

She also stated that about 153 000 members with unclaimed benefits could be wallowing in poverty while their funds lie idle.

“Owing to a number of challenges, companies have been failing to remit pensions to insurance companies. As a result, local companies are in arrears of about $887 million,” she said.

“But what is worrying is that fact that employers collect pensions from employees but fail to remit them to the insurance companies. This has been a worrying trend in the pensions industry,” said Dr Muradzikwa.

Turning to idle funds, she said this was one of the major challenges being faced by the pensions sector hence the need to engage journalists through the Insurance and Pensions Mentorship Programme.

“We are worried about the unclaimed benefits, which are now hovering above $196 million dollars. About 153 000 members with the unclaimed benefits could be wallowing in poverty somewhere due to lack of information as to how the claims are done,” said Dr Muradzikwa.

“We, therefore, have decided to engage media practitioners in a bid to bridge the information gap between service providers and the members so that no member could be found struggling to survive while their funds lie idle.”

She said lack of formal employment opportunities and retrenchments due to closure of companies have paused a great threat to the pensions sector as disposable income is reduced.

The prevailing poor investment climate due to hyperinflationary macro-economic environment has also not helped matters, said Dr Muradzikwa.

The spread of the Covid-19 pandemic has also led to reduced uptake of insurance and pensions products and contribution arrears, she added.

Despite the challenges, Dr Muradzikwa said the pensions sector recorded positive growth mainly on account of revaluation gains in equities and properties.

“The increase in pensions contributions should be attributed to salary increases in response to inflation though salaries are not tracking inflation,” she said.

She said pension contributions recorded a 466 percent increase to $1,2 billion by June this year, up from $212 million by the same period last year.

Meanwhile, pensions asset base also registered a 123 percent increase to $66,41 billion up from $29,81 billion for the same period.–chronicl.co.zw

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