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– The Herald

In my article of April 29, 2021 titled “Liquidation of Pension Funds” I covered the basics on the liquidation of pension funds in Zimbabwe.

I explained that the liquidation or dissolution of pension funds in Zimbabwe is governed by the Pension and Provident Funds Act (Chapter 24:09) or “the Act” and the well thought out Circular 10 of 2019 or “the Circular” issued by the Insurance and Pension Funds Commission (“IPEC”).

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.

Protecting interests of members or employees during liquidation of pension fund

Following my said previous article, I received numerous inquiries on how members’ interests are safeguarded. As promised, I explain in this article some of the key safeguards based on the Act and the Circular.

 Dissolution at the discretion of the Pension Fund in terms of the Rules of the Fund

The key safeguards are outlined in clauses 6-28 of the circular and are explained below

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 a fund is in the best interests of the members. The fund shall not proceed with the dissolution until approved in writing by the Commissioner.

After receiving the Commissioner’s approval, the last board of trustees to be elected, shall within 30 days, appoint an independent and suitable person as a 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. This is meant to ensure good professional standing and competence of the liquidator.

The fund shall submit to the Commission within 30 days, unless extended, the following documents:

A schedule of the names, identity particulars and contact details of the members of the fund.

A statement of the fund’s assets and liabilities clearly showing the distribution across the different classes.

The amount of contribution arrears including any payment plan by the defaulting employer(s).

A schedule of the fund’s creditors (excluding members) together with a scheme setting out the manner in which the liquidator proposes to realise the assets of the fund, to discharge the liabilities to such creditors and to pay the liquidation expenses.

A schedule showing the amounts available for distribution and how it has been allocated to individual members including the manner in which the liquidator intends to use these amounts for the benefit of members.

A pre- distribution certificate in which the liquidator certifies the above information as a true record of the assets and liabilities of the fund.

All benefits that are yet to be vested (accrue to members) should be vested prior to the distribution of the assets to the members.

Crucially in terms of clause 14 it is a requirement for a fund to publish a notice in a newspaper of wide circulation or on any media platform where the capacity to reach all members is high.

The notice shall advise members of the intended dissolution and call on them to come and inspect the schedule on proposed distribution to members. Members are required to sign a register confirming their inspection of the distribution schedule.

In terms of the circular’s clause 20, the fund shall at the time a member inspects the distribution schedule give that member a detailed termination statement which shows, inter alia:

Purpose of the statement.

The amount of benefit payable.

Any adjustments made to the accumulated amount.

The date on which the last contribution to the accumulated fund was paid to the fund.

The portability options available to the member.

A statement on the commutation options and eligibility thereto.


A member’s right to lodge any concerns with IPEC.

In terms of clause 21 no fund shall proceed to pay any benefits to its members until the actual distribution is approved in writing by the Commission. At the conclusion of the actual distribution of the fund, the liquidator shall issue a post distribution certificate in which he or she acknowledges that:

All assets have been distributed in accordance with the distribution schedule approved by the Commissioner, and

Any contingency reserve or return has been accounted for.

Any unclaimed benefits shall be accounted for to the Commission.

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

The procedures as outlined in section 10(2) of the Act are to be followed, main of which are that:

The liquidator, subject to approval by the Commissioner, shall be appointed and determine the liquidation date.

The liquidator to lodge a list of fund assets and liabilities certified by him and a schedule setting out the manner in which he proposes to realise the assets of the fund and discharge the liabilities.

The liquidator to submit a report estimating the total amount available for distribution and his or her recommended distribution to members.

The Commissioner shall cause a notice on the dissolution to be published.

Further, certain IPEC circular 10 provisions apply, being 13(d), 17, 18, 19, 20, 21 and 23.

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