What you need to know about pensions

1. What is the structure of Zimbabwean pension industry like?

The Zimbabwean Pensions Industry may be categorised into four main classes that are Occupational Schemes, Personal Pensions Plans, Public Service Pension Scheme and National Pension Scheme (NSSA). a) Occupational Pensions Schemes These funds are set up by employers for the benefit of their staff; both the employer and employee contribute towards the scheme. These are regulated by IPEC

b) Personal Pension Plans (Individual Schemes)

These are pension plans that are set up by life insurers targeting individual members not necessarily tied to any employer or any formal setting. Such schemes are ideal for those in the informal sector. These are also regulated by IPEC. c) Public Service Pension Scheme This is a pay-as-you–go defined scheme that caters for civil servants. The scheme was established by an Act of Parliament and is not regulated by IPEC. d) National Pension Scheme This is a compulsory pension scheme for all those who are formally employed. The scheme is administered by the National Social Security Authority (NSSA) and is commonly referred to as “NSSA Pension”. Just like the public service pension scheme, NSSA is currently not under the supervision of IPEC.

2. How do I know the amount of pension I will get?

It depends on whether you are a member of a defined benefit pension scheme or a defined contribution scheme. If you are a member of a defined benefit scheme, you will receive a specified level of income that is worked out according to factors such as your final pensionable salary and years of pensionable service.

If you have a defined contribution pension scheme, you build up your own pot of money. The value of this pot can go up or down but over the longterm, pension savings usually grow and you can benefit from a number of tax advantages. When you retire, the amount of money you receive will depend on total accumulated contributions, investment income and the expenses of your schemes and how much it will cost to buy you a pension at that time.

In line with international best practice, pension funds should provide their members with benefit statements. A benefit statement shows how much a member is entitled to based on contributions made to date.

3. What happens to my pension when I die?

If you die while you are still an active member of the fund (still in employment), your dependants or nominated beneficiaries will be entitled to your pension money subject to the rules of the fund and the laws governing pensions.

Apart from the pension from the scheme, some schemes also offer death benefits in addition to accumulated pension. For those who have retired and are already receiving a pension, it will depend on the terms and conditions in the contract that they will have entered with the pension provider.

Some contracts have arrangements where they pay pensioners a regular income until death upon which the pension ceases.

On the other hand, some contracts are such that a member is paid a pension for a certain period wherein if a member dies before the end of that period, nominated beneficiaries will be entitled to get the pension until the predetermined period lapses.

For such contracts, if one outlives the period specified in the contract they will cease to receive the pension.

Fund members are encouraged to check with their scheme’s administrator or pension provider to find out what death benefits are payable to them under their scheme.

4. Is it possible to transfer my pension from one administrator to another?

Yes, it is possible. In the event of a member changing employment from one employer to another, upon leaving employment of a certain employer, when the employer changes the administrator, or when a member retires and seeks to purchase an annuity outside the fund.

You communicate your intention with your former administrator and it can be done and documentation of transactions is traceable for future reference.

5. When can I claim my pension?

Pension benefits can only be claimed when one of the following events occurs: ◆ When you have reached normal retirement age as per the rules of your pension fund; ◆ When you have resigned or have been dismissed; (you only receive your own contributions while the employer contributions are preserved until you reach retirement age or upon your death) ◆ When you have retired early; ◆ When you have been retrenched; ◆ When you leave employment for

medical reasons; and ◆ When the fund member has died,

and you are a beneficiary. We also have a radio programme, “Inside Insurance and Pensions” on Star FM radio station every Wednesday from 7:30pm-8:00pm.

For any enquiries on insurance and pensions, please contact us on the following details: 160 Rhodesville Avenue, Greendale, Harare Tel: (04) 443358 /443361 /443322 Cell: 0772 154 281 /2 /3/ 4 WhatsApp: 0772 154 281 Email: enquiry@ipec.co.zw Facebook: Insurance and Pensions Commission Twitter: @IPECZW Website: www.ipec.co.zw.