SEVERAL Zimbabwean firms, battling to shake-off an economic crisis, have defaulted on remitting workers contributions to pension funds, putting them at the risk of losing benefits, a report by the Insurance and Pensions Commission (Ipec) showed on Friday.
Ipec said arrears rocketed by a staggering 236% during the first quarter of this year, compared to the same period in 2020.
“Contribution arrears increased by 236%, to $2,25 billion from $0,67 billion reported as at 31 March 2020,”
the regulator said.
“The increase is mainly attributed to the application of interest on arrears as well as the continued non-remittance of contribution arrears by some sponsoring employers. Of the $2,25 billion, 81,72% (which translates to $1,84 billion) is owed to stand-alone funds.
“The Local Authorities Pension Fund, the Mining Industry Pension Fund and the Zimbabwe Electricity Industry Pension Fund constituted more than 75% to the industry’s contribution arrears.
“Notwithstanding the decline in the proportion of contribution arrears to total assets, sponsoring employers are urged to clear these contribution arrears so that pension scheme members do not lose their benefits through this unfunded portion,”
The industry’s asset base grew in nominal terms by 494,16% to $177,12 billion during the review period, from $29,81 billion during the same period in 2020.
There was also a growth in the industry’s assets in United State dollar- terms to US$2,10 billion, from US$1,19 billion reported during the same period last year on account of price discovery on major asset classes such as investment property and quoted equities.
“In addition, contributions made for the period under review also contributed to the growth in assets.
“The industry’s asset base of $177,12 billion translates to a pension penetration rate of 16,54%, expressed as a percentage of the gross domestic product (GDP).
“This significant proportion of assets to GDP confirms the important role played by the pensions industry in socio-economic development of the country,”