The Sunday News
Munyaradzi Musiiwa, Midlands Correspondent
LOCAL companies have failed to remit at least $887 million in employee pension contributions to pension funds for the first six months of the year.
Speaking during a virtual conference with journalists on Tuesday Insurance and Pensions Commission Commissioner, Dr Grace Muradzikwa has most companies have been struggling to remit pension funds to insurance companies due to various reasons.
Dr Muradzikwa said there are also more than 153 000 pensioners who have not claimed their benefits from the insurance companies and the unclaimed benefits have accumulated to $196 million.
“Some of the challenges that the pensions and insurance sector are facing are that companies have not been able to remit pension funds. There are contribution arrears of $887 million. The pension fund has also been affected by reduced disposable income owing to company closures, retrenchments and lack of formal employment opportunities.
There are also unclaimed Benefits. There are at least 153,000 members with unclaimed Benefits that have accumulated to about $196 million.
The challenges that the pensions sector are poor investment climate and low confidence owing to hyperinflationary legacy issues,” she said.
Dr Muradzikwa said despite the challenges bedevilling the sector that have also been exacerbated by Covid-19 effects , the pensions and insurance sectors have managed to pay more than $ 1.2 billion in claims combined between January and June this year.
“Notwithstanding the macroeconomic challenges and the global Covid-19 pandemic, the industry remains resilient as indicated by the fact that the Industry has continued to operate, paying claims and benefits even during Covid-19-induced lockdowns. The insurance sector paid about $726 million in claims from April to June 2020 while the Pensions Sector paid benefits worth $483 million from January to June 2020.
The industry is capital intensive as opposed to labour intensity,” she said.
Dr Muradzikwa said the pensions sector has witnessed a nominal increase in asset base between January and June this year as compared to the same period last year.
“The pensions sector had growth in asset base after recording an increase of 843 percent from June 2019 to June 2020, which is above the June annual inflation rate of 732 percent.
The increase in asset base was mainly on account of the revaluation gains in equities and properties. The pension sector now has assets worth ZWL$ 66.41 billion up from $ 29.81 billion recorded last year.
The increase in pension contributions could be attributed to salary increases in response to inflation though salaries aren’t tracking inflation. The pensions contributions increased to$ 1.2 billion in June up from $ 212 million recorded in June last year,” she said.
