Term for pension probe team expires

Applies for extension Disagreements over extension period

PENSIONERS and policyholders might have to wait a little bit longer to get the outcome of the inquiry into whether there was any financial prejudice suffered through the conversion of policies and values from the Zimbabwe dollar to the United States dollar after it emerged that the mandate of the probe team expired on August 31, 2016.

However, it has since emerged that an application to extend its life has since been lodged through the Ministry of Finance and Economic Development, which is the parent ministry.

The eight-member commission of inquiry into the conversion of pension benefits and insurance contributions, which was sworn in by President Robert Mugabe on August 19 last year, was expected to have wrapped up its work at the end of last month.

But inherent teething problems at the beginning of the investigations and reluctance from some pension and insurance companies bogged down the team.

Authoritative sources told The Sunday Mail Business last week that the amount of work that the commission has to plough through in order to satisfactorily exhaust the 14 items of the terms of reference as provided for in Statutory Instrument 80 of 2015 warrants a reasonable timeframe within which to complete the work.

It is believed that the commission has to pore over data from more than 20 insurance companies, 15 brokers, self-administered pension funds, the public service pension fund, Government’s guardian pension fund, National Social Security Authority (NSSA) pension fund and other benefit schemes. When the commission concludes its investigations, it is supposed to come up with a report that will be used to compensate pensioners and policy holders in instances where they might have been short changed.

Not only is the process meant to address the concerns of the affected parties, it is also designed to restore trust and confidence in both the pension and insurance sector.

“The Commission has since established that addressing each of the items of the terms of reference requires setting up appropriate methodology, an identification of data and or information to be processed by the said methodology, and therefore a need to gather the data and information required in the methodology,” said a source in the insurance sector that is familiar with the latest developments.

“Appropriate methodology and data also have to be set up and collected, respectively, for the regulator — the Insurance and Pension Commission (Ipec).

“The process of collecting such data requires interacting with stakeholders such as pensioners, policyholders, insurance companies, pension funds and checking that the data provided is reasonable and consistent. . .

“It should be noted that each of the insurance companies and brokers administer many pension funds and or insurance policies, and that each pension fund and insurance policy is characterised by several attributes – which attributes constitute the data that the commission requires.

“Extensive time-consuming work has to be undertaken by the commission in the bid to resolve the terms of reference, hence, the request for an extension,” said the source.

The reluctance by some of the companies to provide crucial data required by the commission has raised suspicion that pensioners and policyholders may indeed have been prejudiced.

The commission has had to resort to subpoenaing firms such as Old Mutual, First Mutual, Comarton and Marsh.

Efforts to get a comment from Justice George Smith, who chairs the commission, were fruitless as he was reportedly unwell.

His deputy, Mrs Violet Mutandwa, declined to comment.

“Unfortunately, I am unable to comment on that issue at this stage. The best person you could have spoken with is Justice Smith, but he is unwell,” said Mrs Mutandwa recently.

Permanent secretary in the Ministry of Finance and Economic Development Mr William Manungo referred questions to Finance and Economic Development Minister Mr Patrick Chinamasa. Unfortunately, the minister was not picking up calls during the past two weeks.

Differences emerge over extension

It has emerged that there are dif- ferences within the commission itself and also between the commission and Government where the extension is concerned.

While some officials in the Ministry of Finance are believed to be pushing for a four-month extension, which will see the inquiry being concluded by the end of the year, some members of the commission feel that this period will not be enough to competently conclude the mandate.

They, however, believe an extension to August 2017 will suffice.

Commission’s skills set

It is also believed that another factor that prompts the seemingly inordinate extension that is being sought by the commission is the skills set that is provided by the members of the commission.

There are experts who argue that while the commission is properly constituted with experts that can ably compile an error-proof report, the members who have the real expertise of unravelling the complexities of the conversions in the insurance and pension industry are few. Of the eight members of the commission, only two — Mr Tapiwa Maswera, who is an actuary with pensions consulting experience; and Mr Martin Tarusenga, who also has actuarial training with pension and insurance experience — are very familiar with the sector.

Dr Godfey Kanyenze and Mr Brains Muchemwa are distinguished economists, with the former also having labour consulting experience.

Mrs Violet Mtandwa is a lawyer by training, with vast experience in the corporate world, while Justice Smith has had an illustrious carrier on the bench.

In addition, Mr Itai Chirume is an investment analyst with stock broking and consulting experience, and Mr Anesu Daka is an auditor who also has consulting experience.

One of the major tasks of the commission is to establish the total value of pensions as at December 31, 20016 and as at March 31, 2009.

It is also mandated to find out the value of old generation pension funds and the newer generation pension funds as of December 31, 2016 and March 31, 2009.

The conversion of pension fund liabilities has been a contentious issue since 2009 as calculations depended mainly on valuations made during the hyperinflationary era.

Various professional bodies such as the Actuarial Society of Zimbabwe and the Zimbabwe Association of Pension Funds have been seized with the issue.

During the changeover period, some brokers roped in private valuators — mostly actuaries — to determine the valuations.

In some cases, valuators simply took the members share of assets in the Zimbabwe-dollar era at the conversion date and determined that proportionate share in US dollars.

But pension fund valuation is a statutory requirement whose valuation procedure is guided by principles that must be strictly adhered to.

This is the reason why valuators are usually considered to be liable and culpable for any principle that will be wrongly applied during the valuation process.

There is also suspicion that valuators might end up picking up the tab in cases where victims prejudiced during the conversion period have to be compensated.

Concern has mainly been raised in cases where a different method that is used to determine the valuation of the amount due to policyholders and pensioners produces a totally different value.