ZIMBABWE Association of Pension Funds (ZAPF) has proposed that government compensate the pension sector with land for the value that was lost during the decade-long hyperinflation which eroded prescribed assets and cash at banks for pension fund members.
By Cloudine Matola
During the hyperinflation period, the pension industry saw money markets and prescribed assets denominated in Zimdollars lose value.
ZAPF director-general Sandra Musevenzo last week told businessdigest on the sidelines of ZAPF breakfast meeting in Harare this week that the pension industry had been hard hit by inflation and as an industry they cannot compensate for inflation.
“There are two main issues that we highlighted here to say we need closure to the commission of enquiry and in that closure as an industry we cannot compensate for inflation which was lost,” Musevenzo said.
“However, government should also play a role in this compensation and give us land as the pension industry and as part of compensation of that value which was lost.”
She said the industry needs to have property and assets that will provide a buffer against inflation.
“Even when we dollarise, the only things that could withstand inflation was your property, your buildings, those are the ones that we valued, and the equities. Those are what hedge against inflation mostly,” she said.
Musevenzo said due to the high inflation outlook, the pension industry is looking to have inflation-linked bonds that will help the industry to track inflation and enable them to value their asset.
“Let us have those so that they track inflation. As you saw from the presentation by the investment manager, inflation is at 176%, so how do you then value your assets?” she asked.
“At conversion in 2009 people got US$5 each at least for de-monetisation from these money market places, therefore we are also calling for inflation-linked bonds, those prescribed assets, to say we have inflation-linked bonds.”