Pensioners to wait longer for pre-2009 value loss compensation

PENSIONERS whose savings lost value around 2009 will have to wait a bit longer to start receiving compensation because all players in the pensions and insurance industry failed to provide acceptable compensation schemes.

According to compensation timelines outlined in Statutory Instrument (SI) 162 of 2023 (Compensation for Loss of Pre-2009 Value of Pension Benefits Regulations) promulgated last September, compensation was expected to begin this month. Last week, the Insurance and Pensions Commission (IPEC) said none of the submitted compensation plans met the set requirements.

“None of the 1 249 assessed compensation schemes were approved due to non-compliance with the provisions of Statutory Instrument 162 of 2023. As a result, the actual payments, which were initially scheduled to commence in March 2024, will not be possible,” said IPEC.

At least 1 395 submissions were expected in total. The sector regulator said some of the assessed 1 249 compensation schemes were “close to fully complying with the compensation regulations”, and payments would start once the schemes met the requirements.

The balance of 146 schemes either did not submit at all or submitted incomplete plans.

According to SI 162 of 2023, if IPEC rejects a compensation scheme, the fund or insurer concerned shall resubmit a revised compensation scheme within 14 days of being notified by the commission of the rejection.

During the hyperinflationary period between 2007 and 2009, the value of most savings (including insurance and pensions policies) was eroded.

The Justice Smith Commission of Inquiry, which was appointed in 2015 to probe the conversion process, blamed the value erosion largely on poor regulatory enforcement and demonetisation of the local currency.

The commission concluded that“there was a huge loss of value to insurance policyholders and pensioners owing to failure by Government, the Insurance and Pensions Commission and the industry to set up a fair and equitable process of converting insurance and pension values from Zimbabwe dollars to US dollars”.

In terms of calculating the compensation amounts, the schemes are expected to add up the United States dollar sums for each year of a member’s contribution, and then adjust at the appropriate interest rate based on the fund’s experience, subject to a minimum annual rate of 3 percent compound interest up to February 28, 2009.

Independent actuary Mr David Mureriwa has estimated compensation for pensioners to be around US$900 million.