IPEC proposes pension benefits before retirement

17 Jun, 2019 - 00:06 0 Views
IPEC proposes pension benefits before retirement Insurance and Pensions Commission

The Chronicle

Natasha Chamba/Locadia Mavhudzi, Business Reporter 

THE Insurance and Pensions Commission (IPEC) is considering a proposal that will see workers accessing part of their pension funds before retirement age so as to preserve value for their contributions. 

IPEC head of pensions department, Mr Josphat Kakwere, said this at a training session for pension trustees at a hotel in Bulawayo last week. 

“IPEC has recently sent a proposition that pensioners access their pensions before their retirement age as a measure to preserve value,” he said.

“We are proposing that people above the ages of 40 get to access at least 50 percent of their pensions and those below 40 years of age get to access a lower percentage because their moneys can gain value with time unlike people near retirement age.” 

Participants supported the proposal and demanded that IPEC must put measures in place to prevent people’s pensions from being eroded as was the case in 2009. 

Mr Kakwere said the proposal was yet to be approved by relevant authorities. 

Earlier in the year when Government had introduced the inter-bank forex exchange system, the regulator allayed fears that the value of pensions would be eroded. 

IPEC is on record saying the floating of the rate by Government meant that some pension fund assets would be pushed upwards in RTGS dollar terms, which would result in corresponding upward review of the liabilities in RTGS value.

IPEC has been rolling out capacity building initiatives with stakeholders across the country as a way of enhancing improved management of pension funds.

In Gweru the authority urged companies and local authorities to uphold corporate governance in the management of pension funds. 

“The law provides that contributions should be remitted in time. We have often experienced complaints from beneficiaries who fail to get their pension funds because the employer was not remitting anything. 

“It is your duty to ensure that members of the fund are adequately informed of their rights, benefits and duties in terms of the rules of the fund,” he said.

Mr Kakwere said trustees must take all reasonable steps to ensure that contributions were paid on time and that employees must take their employer to court in the  event of failure to remit pension contribution.

Board chairperson of the local authorities’ pension fund, Ms Elizabeth Gwatipedza, said the harsh economic environment has been the major setback for the timely remittance of pension funds in local authorities.

Pensioners from the National Railways of Zimbabwe who attended the workshop in Gweru said they were yet to receive meaningful pension benefits from their former employer while their medical aid scheme was no longer acceptable in most health institutions.

Meanwhile, Mr Kakwere said poor performing parastatals should consider moving from the defined benefits (DB) pension scheme to the defined contribution (DC) scheme.

The DB model is a pension scheme where the amount you are paid is based on how many years you have worked for your employer and the salary you have earned, while DC schemes are occupational pension schemes where your own contributions and your employers contributions are both invested. 

“The majority of parastatals with DB schemes are not performing well yet they are making promises in place of the Government that are far-fetched. 

“So, we want to reduce fiscal pressure on Government. If a pension fund cannot afford to be a DB it should then be a DC,” he said. 

“Some of these parastatals are failing to pay salaries let alone benefits. In the end it will be a promise that will not be met.” 

Mr Kakwere said this after the trustees at the training session had raised concern that the DB scheme had become unrealistic in the current economic atmosphere the country was operating in. — @queentauruszw

Share This: