Dealing with emotional issue of pensions

EDITOR — Zim PIRT is just giving its advocacy side without looking at other facts. Asset values of pension funds are also currently negatively affected by the economic situation in the country, where rentals from buildings have declined, share prices decline; affecting equity portfolios.

Contributions from members are negatively affected by job losses. Hyperinflation affected the whole economy in value loss, not only pensioners. Savings were lost in banks also. When the Reserve Bank of Zimbabwe directed demonetisation of the Zimbabwe dollar, we all know the values depositors got and no finger was raised. In most cases, pension fund trustees determined investment portfolio structures in consultation with their fund managers.

Exchange control regulations never allowed investment outside the country to mitigate or run away from hyperinflation.

Some pension fund trustees chased the interest rates illusion and had 60-80 percent of their funds in money market portfolios.

Only few funds that remained 70-80 percent non-money market portfolios could claim some modest value in their funds after the devastating hyperinflation.

Loans in the Zimbabwe dollar to Government also lost value.

The then Government Registrar of Pension Funds was fully informed about the erosion of value in pension funds and in all cases approved the valuations before payments to pensioners.

We cannot invent the historical wheel on the adverse effects of hyperinflation.

It is unfortunate that after hyperinflation, as happened in other countries, governments will not have resources to cushion pensioners.

I speak as an economist who was exposed to the affected financial sector for nearly three decades at executive level in investments, risk and compliance.

While I would also welcome a higher pension value as a pensioner, I must declare my professional interest, too, on this vexed and emotional issue.

We all await the important report from the Commission. Cde Mzvinavhu (Prof), Via Email