THE insurance and pensions industry is now under pressure to conclude the Justice Smith Commission of Inquiry recommendations following the government’s move to compensate pensioners for the loss in value incurred in the currency changes in 2019, businessdigest has learnt.
Compensation for the pre-2009 loss of value and subsequent currency conversion in 2009 when the country adopted the multi-currency regime has remained outstanding even after the adoption of the Smith Report.
At a time the government has moved to avail a US$75 million package for pensioner’s loss of value in the 2019 currency conversation which was announced in the 2021 national budget , the industry is yet to commence the revaluation of assets that will allow for compensation of pensioners.
The commission has in the past raised the red flag over inconsistencies in timing and methodologies of asset valuations used by pension funds and insurers which were contributing to the paltry benefits paid out by funds.
But this week, Insurance and Pensions Commissioner, Grace told businessdigest that the industry had to finalise the compensation of losses incurred in 2009.
“The matter cannot be swept under the carpet and the Commission would want to see closure on the matter. We are under pressure as an industry following the recent gesture by Government of allocating US$75 million to cushion pensioners and policyholders from the loss of value for 2019, ”she said
“The industry is supposed to revalue their assets and redistribute the valuation gains for pre-2009. The industry is supposed to be looking at their assets and allocate them so as to compensate pensioners for the pre-2009 period and the process has not even started.”
Asset valuation determines the fair market or present value of assets, using book values, absolute valuation models like discounted cashflow analysis, option pricing models or comparable.
There are expectations that should industry handle its expenses as well as use prescribed guidelines, there is a chance it will realise value that will enable it to revisit alleviate the pensioners’ plight of low benefits.
Muradzikwa added that closure on the issue was expected in 2021.
“What we have done is we have put together a working party and it is coming up with proposals.
The Smith commission prescribed how they go about with the implementations.
We have said fine, let’s work together and look at the recommendations that were made by the Commission. We can come up with proposals. So I think in 2021 we have to deal with this once and for all.
In light of pensioners benefits. I’m glad that this year we have made some progress as they have received up to 600% increases. It is not enough but at least something was done this year,” she said.
Zimbabwe has been going through a number of currency transitions which have in most cases severely eroded insurance and pension values. Such issues have over the past decade remained unresolved resulting in loss of confidence in the sector.