eBusiness Weekly
Martin Tarusenga
The much hyped 2019 National Budget has come and gone. With regards to the Budget’s agenda to pension and insurance service provision in Zimbabwe, it has mandated Insurance and Pension Commission (IPEC) to unpack the Justice Smith Commission Report and “ . . . come up with an implementation framework that will address complaints relating to low values, low confidence, corporate governance challenges and high expense ratios, among other things”.
This part of the 2019 National Budget is clearly derived from point 147 of the Transitional Stabilisation Programme as issued by the Ministry of Finance and Economic Development.
The mandate to IPEC apparently and inappropriately stifles an outstanding Parliamentary procedure as resolved by the Parliamentary Portfolio Committee on Finance and Economic Development on May 14, 2018, in the National Assembly.
This Parliamentary Committee, with submissions from stakeholders, resolved to unpack the Justice Smith Commission Report in more depth, in a later longer Committee session, having noted several irregularities with the Report and with the inquiry itself.
After carrying out this in-depth deliberation with stakeholders, this Parliamentary Committee was meant to make its own recommendations to the main Parliamentary body for further final consideration and presentation to the President and Cabinet for assent into law.
The glaring irregularities picked up by this Committee included the Report Recommendation that IPEC runs the compensation programme when IPEC was, and is responsible for pensioner prejudice itself, and therefore wholly inappropriate, as it breaches principles and practices of good corporate governance, while the other curious irregularity was associated with the resignation of a Commissioner of Inquiry having cited meddling with the Inquiry by ministry officials. Several newspaper analyses would suggest strongly that the Inquiry was indeed meddled with.
The Parliamentary Portfolio Committee would not hold this longer session to unpack the Commission Report, as the June 2018 electioneering would be prioritised by both sitting and would-be Parliamentarians. Rationally the new Parliament (after elections) would be expected to take up this issue from where the last Parliament left off.
Pensioner inquiries with Mr Mhona, the new chairman of the Parliamentary Portfolio Committee on Finance and Economic Development, demonstrate that the Committee has not tied the loose ends regarding the Justice Smith Commission Report.
Due legal process has not been held, therefore raising questions as to how the Finance Ministry Transitional Stabilisation Programme arrived at the decision to mandate IPEC.
The IPEC mandate, and indeed this provision of the 2019 National Budget mandating IPEC may therefore be illegal, and aimed at a compensation programme by IPEC to maintain the pensioner prejudice. This is because IPEC is unlikely to be impartial having perpetrated the wrong in the first place.
Meanwhile, millions of pensioners and policyholders have been prejudiced. These pensioners span subscribers to schemes such as the Public Service Pension Scheme, the NSSA pension and insurance schemes, private insurance schemes and the private occupational pension schemes regulated by IPEC.
According to data from a pensioner organisation Zimbabwe Pensions and Insurance Rights Trust (ZimPIRT), examples subscribers are from ZBC, NRZ, MIPF, RBZ (Fintrust), Zupco, Beverly (now CBZ), Standard Chartered Bank, among very many other pension funds.
They continue to be prejudiced as we speak. The prejudice occurs as a result of wrong benefit calculations, permissive pension and insurance legislation, deliberate disregard of the rights and interests of pensioners and policyholders by insurers and other pension houses, by regulators and ministry officials, various irregularities in areas such as investment management of pension and insurance funds, solvency management, among others.
These causes of pensioner prejudice were presented to ministry officials on October 25, 2018, by ZimPIRT, in a paper serving as ZimPIRT’s contribution to the 2019 National Budget consultations.
The paper presented categorical evidence of these causes of prejudice to pensioners, and the evidence that inflation played very little in this prejudice. The paper further proposed its solutions to resolve the prejudice and to protect the interests of pensioners and policyholders.
These solutions include urgently and comprehensively reviewing pension and insurance legislation with wide public stakeholder consultations, reorganising pension and insurance regulations and the regulatory approaches and setting in trend a compensation programme, instituting appropriate accountability measures in good governance (fairness, transparency and responsibility) — in zero tolerance.
Apart from directly benefiting pensioners and policyholders by honouring full pensioner rights, and removing the apparent corruption, the paper demonstrated significant reductions in Government expenditure in pension and insurance service provision, and pointed out the significant macroeconomic benefits if the ZimPIRT proposed solutions are taken on board.
Now with all the contributions to the Budget, and if Parliament was not involved in passing the Transitional Stabilisation Programme, then it can only be the Ministry of Finance and Economic Development that unilaterally imposed the Stabilisation Programme and its mandate to IPEC.
Considering the history of hindrances to the resolution of pensioner prejudice by ministry officials, with their agenda to keep regulators such as IPEC weak and in their bid to cover up their tracks in the mismanagement of pension and insurance funds, it is reasonable to conclude that it is the same ministry officials that stifled the Parliamentary process in order to impose IPEC.
Such ministry officials would obviously have been involved in previous mismanagement and mis-regulation of pension and insurance funds.
There are a number of senior officials in Government who own or are linked to companies that manage some organisational pension schemes, making it difficult to stamp out some shenanigans that eventually prejudice many pension contributors.
Pensioners are appealing to Parliamentarians and to the new Minister of Finance and Economic Development (Prof Mthuli Ncube) and the new Permanent Secretary (Mr George Guvamatanga) to do the right thing unto the pension funds, their pensioners and ultimately unto the economy to the extent the funds have a significant role in economic development.
Opinions expressed herein are those of the author and do not represent those of the organisations that the author represent.
Martin Tarusenga is General Manager of Zimbabwe Pensions & Insurance Rights, email, [email protected]; telephone; +263 (0)4 797 020; Mobile; +263 (0)772 889 716.
