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The liquidation or dissolution of pension funds in Zimbabwe is governed by the Pension and Provident Funds Act (Chapter 24:09) or “the Act”. Consultations with the Insurance and Pensions Funds Commission (“IPEC”) revealed that a fund is dissolved under two circumstances as outlined in section 10(1) of the Act, being:

At the discretion of the Pension Fund in terms of the Rules of the Fund, or At the direction of the Commissioner (of IPEC) in terms of section 19 of the Act.

Section 10 of the Act provides for the process that is followed when a fund is dissolved, including the appointment and approval of the liquidator. Further, according to IPEC, in a bid to ensure compliance as well as guidance in the manner in which the process is to be conducted the regulatory body under the leadership of Mrs Grace Muradzikwa, issued Circular 10 of 2019 which provides a step by step procedure on how the liquidation process should be carried out. The circular, which covers liquidation under both circumstances, has the force and effect of law.

In terms of section 19(3) of the Act if the Commissioner is of the opinion that the financial condition of a registered fund is such that it is not possible or practicable to bring it into a financially sound condition within a reasonable time he or she may direct that the whole or any part of the business of the fund shall be wound up and that the provisions of section 10 shall apply subject to certain modifications.

Process of liquidating a pension fund

The liquidation process depends on whether the dissolution is in terms of:

Section 10(1)(a), that is, in terms of the provisions of the rules of the fund, or

It is directed by the Commissioner in terms of section 19 of the Act.

Dissolution in terms of the Pension Rules

According to Circular 10 of 2019 the processes for dissolution outlined in the fund rules are inadequate resulting in some members being prejudiced financially. IPEC has also noted that funds do not seek the Commissioner’s approval prior to the dissolution and neither do they inform the Commission of such dissolutions. This has caused challenges as the whole process becomes opaque and difficult to trace resulting in challenges when trying to resolve disputes from members of such funds.

Due to the above challenges, IPEC through Circular 10 of 2019, directs all pension funds to incorporate certain key aspects in their pension fund rules for purposes of dissolution of the fund. The procedures for dissolving a fund are laid out from clause 6 to 28. Some of the key aspects are that:

Every fund shall make an application for the Commissioner’s approval prior to dissolving the fund.

The application must outline the circumstances leading to the resolution to dissolve the fund including a statement on how dissolving the fund is in the best interests of the members. The fund shall not proceed with the dissolution until it has received written approval from the Commission.

After receiving the Commissioner’s approval, the board of trustees that was appointed through the last election shall continue in office regardless of whether their term of office has expired or not. This board of tustees shall, within a reasonable time, but not later than 30 days, appoint an independent and suitable person as liquidator. The liquidator must be a fit and proper person and possess adequate expertise and knowledge relating to the valuation of pension fund assets and liabilities.

Clause 12 requires certain documents to be lodged with the Commissioner, within 30 days of appointing a liquidator, being details of the fund members, assets and liabilities, arrear contributions, other debtors, creditors, amount available for distribution and how it will be distributed and a pre-distribution certificate by the liquidator.

No fund shall proceed to pay any benefits to its members until it receives written communication from the Commissioner authorising the actual distribution of the assets to the members.

A fund that intends to dissolve a part of the fund that is attributable to specific participating employer/s of an umbrella fund or an identified group of members of a fund, may do so subject to approval by the Commission.

Dissolution of pension fund following Commissioner’s directive in terms of section 19(3) of the Act

According to clause 29 of Circular 10 of 2019, where the dissolution is directed in terms of section 19(3), the procedure to be followed is outlined in section 10(2) of the Act.In terms of section 10(2) and Circular 10 of 2019 the main points are that:

A liquidator approved by the Commissioner shall be appointed in the manner provided for in the rules of the fund.

The liquidator shall determine the date of liquidation.

Until the liquidation is completed, the provisions of the Act shall apply.

The liquidator to lodge with the Commission a list of assets and liabilities of the fund certified by him.

Challenges faced during disbursements

Consultations with IPEC revealed that at times funds in liquidation struggle to locate members if sponsoring employers have ceased operations.

Safeguarding interests of member employees during liquidations

Space permitting, this will be covered in a future article.

This simplified article is for general information purposes only and does not constitute the writer’s professional advice.

Godknows Hofisi, LLB(UNISA), B.Acc(UZ), CA(Z), MBA(EBS,UK) is a legal practitioner / conveyancer with a local law firm, chartered accountant, insolvency practitioner, registered tax accountant, consultant in deal structuring, business management and tax and is an experienced director including as chairperson. He writes in his personal capacity. He can be contacted on +263 772 246 900 or

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