THE Insurance and Pension Commission (IPEC) has slashed the first quarter levy for pension funds by half after most organisations failed to raise the fees.
IPEC had written to pension funds in December advising them that it was reviewing the first quarter levy to 5 000% of net book value plus a base fee of $30 million.
The commission had set January 12 as the deadline for the payment of the levy. Businessdigest understands that the commission was forced to review levy after most pension funds failed to raise the required fees. This forced IPEC to push the deadline to January 31.
“Virtually all pension funds defaulted the first deadline, save for an international company that obliged. The December hikes of 5 000% on actual value of assets were unjustifiable, hence the 2 500% slash,” said an IPEC official.
The official said the reduction came after more than half of the estimated 2 000 registered pension funds raised concerns over the “quantum of levies” to the insurance regulator.
A penalty of 1 100% per annum will be charged for pension funds that fail to meet the deadline.
Industry players however warned that even the 2 500% was way too high for most pension funds which are already struggling with inflation.
“The figure of 2 500% is just too much. I doubt that most pension funds will be able to raise that kind of money,” said a manager with a local pension fund.
IPEC Commissioner Manett Mpofu confirmed that pension funds and the Life Offices Association approached the commission for a review of quarterly levies.
“However, the Zimbabwe Association of Pension Funds and the Life Offices Association have approached the Insurance and Pensions Commission for further discussion on the issue. The discussions have been concluded and the institutions are required to have paid by the 31st January 2008,” said Mpofu.
Efforts to seek comment from the director-general of the Zimbabwe Association of Pension Funds, Tendayi Kakora were in vain as she directed all questions to IPEC.
At least 105 institutions out of an estimated 2000 have been registered with IPEC to date.