Unpredictable exchange rate affecting pensions
INVESTMENTS in the pensions sector are under threat as a result of the currency volatility that has wreaked havoc on the economy.
is comes as the industry is saddled with a number of challenges mainly emanating from the ongoing economic meltdown which has made medium-to-long term investment in the industry unsustainable.
Comarton Consultants group managing director Richard Muirimi told participants at the ongoing Zimbabwe Association for Pension Funds (ZAPF) annual conference in Victoria Falls yesterday that the unpredictable exchange rates prevailing in the market were adversely impacting on investments.
“at is a big issue that needs to be addressed if we are going to be successful in delivering our mandate. We cannot deal with long-term investments in an environment where turbulence affects the investments we have worked for over the years. Unless we deal with these issues of having a predictable exchange rate, it is going to be difficult for us to deliver on our mandate,” he said.
Muirimi said the other issue was on the shrinking contribution base where companies are failing to remit in light of honorarium payments to employees as they try to cushion them from the economic crisis.
He said the impact of this was that the honorarium payouts were not pensionable.
“e problem is that in this environment, nobody is able to give pensions from salaries invested purely in Zimdollars. e reason for that is when we get paid, we all run to the market and buy US dollars. What the employers are doing is that they are giving some other honorarium payments. All those honorariums are actually deducted from the pensions. e result is that the actual contribution base is shrinking,” he said.
Muirimi called upon the industry to look at investments in sectors such as agriculture where there are numerous opportunities for the industry to earn export revenue