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Microfinance employees in pension scheme

EMPLOYEES in the microfinance sector will now be able to enjoy pension benefits upon retirement following the approval by the Insurance and Pensions Commision (Ipec) earlier this month for the setting up of a Micro Finance Industry pension fund, businessdigest can reveal.

Report by Clive Mphambela

Cavport Consultants MD Emmanuel Matina, whose company is the employee benefits consulting firm behind the setting up of the MFI Pension, said the scheme was licenced by Ipec on May 2 2013 following the registration earlier on April 24 of a trust deed to govern the operations of the Fund.

Under Zimbabwean laws, a pension fund must set up a trust deed to be administered by a properly balanced board of trustees which must comprise trustees elected from both employee and employer representatives from the participating employers as well as independent trustees drawn from relevant professional fields.

The MFI Pension Fund has already appointed to its board lawyer Advocate Taona Sibanda and Kotsai Makamure, a chartered accountant.

Bankers George Nachamba and Agnela Mavhunga as well as investments practitioner Andrew Masuwa have also been proposed to the board of trustees as independent trustees, while an additional three trustees will be drawn from employer organisations.

At least 15 registered micro finance companies, led by industry leader FMC Financial Services, have come together for the ground breaking industry initiative.

There are 54 registered microfinance institutions and more than 150 money-lending companies. The combined workforce is estimated at more than 3 000 employees.

Datvest Asset Mangement are the asset managers, while Cavport are the fund administrators. Chartered Accountants firm, Grant Thornton, are the appointed independent auditors of the fund.

According to Matina, the rules of the fund have been drawn up and it should start accepting member contributions by July 1.

The fund has been set up as an umbrella fund on a defined contribution basis.

Zimbabwe Association of Pension Funds (Zapf) chairman, Francis Masukusa, said the development was welcome as the new scheme was going to contribute to the growth of the pensions industry and the national savings base. He said the MFI sector was growing and it made perfect sense for the industry to set up its own pension fund.
“Firstly, I must applaud the players in the industry who have taken this important step.

Employees in most of the microfinance companies in the sector have been previously excluded from pension arrangements by virtue of the small size of the employer organisations, who typically have ten or less employees,” he said.

Masukusa said the scheme had the advantage that it would cater for industry specific needs such as early exit arrangements or higher contribution levels to compensate for the shorter working careers.
According to Masukusa, the MFI Pension fund would be covered by an umbrella policy, with each individual pensioner having his or her own accumulation account.

James Msipa, managing director of Quest Financial Services, one of the first MFIs to join the pension scheme, said the MFI Bill being presently debated in parliament was going to usher in a new era in the MFI space and consequently the industry has to position itself as an employer of choice.

“Employees will now be able to feel comfortable to start a career in microfinance and continue until retirement, knowing fully well that they and their families are covered even after they die,” he said.
Msipa said employers would benefit as they would now haveleverage to retain key skills, adding the quality of their business would now improve.

“Previously MFIs were unable to retain high skills for very long.
The offering of pension benefits will go a long way in closing the gap between employers in the mainstream banking sector and the MFI sector. This development also affirms that the sector is maturing and taking itself and its employees seriously and this will augur well for the growth of the sector,” Msipa said.

“From a global perspective this is a first umbrella scheme of its kind and firmly puts Zimbabwe’s MFI sector on the map as highly organised.”

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