THE Insurance and Pensions Commission (Ipec) has welcomed the amendment of the Insurance and Pensions Bill, which will allow it to regulate the National Social Security Authority (Nssa), amid outrage by the country’s largest labour organisation, the Zimbabwe Congress of Trade Unions (ZCTU).
This comes after the government approved the Insurance and Pensions Commission (Amendment) Bill, 2020 this week.
It was presented by the Attorney-General Prince Machaya on behalf of the chairperson of the Cabinet committee on legislation.
Cabinet said the Insurance and Pensions Commission Bill will strengthen the integrity of the insurance sector and enable it to play its role in supervising the sector.
Ipec commissioner Grace Muradzikwa welcomed the government’s decision, which she said was long overdue.
“We are excited about this development because amendments to these important pieces of legislation in respect of the insurance and pensions industry are long overdue,” she said
“As stated by the government, the amendments seek to align our legislation with international best practice and to capacitate the regulator to exercise its mandate effectively and efficiently for the protection of policyholders and pension scheme members.”
The bills will now go through the usual law-making process before they become law.
But the ZCTU raised strong objections to the regulation of Nssa by Ipec, which it says has failed dismally to regulate the insurance sector.
“The amendment seeks to strengthen the supervisory role of Ipec in the insurance industry and yet the same regulator has been accused of shortchanging policy holders,” ZCTU secretary-general Japhet Moyo charged.
“The taste of the pudding is in the eating. It is still to be seen if Ipec will arrest the cheating that has taken place in the industry. Policy holders have lost millions of dollars if not billions to unscrupulous practices within the industry.”
Moyo said the starting point would have been to implement the recommendations of the Justice Smith Commission.
Following the value erosion that took place during the 2008 hyperinflation era, the government assigned the Justice Smith Commission of Inquiry to look into the matter.
And one of the major highlights of the report was that the insurance and pension industry was not effectively regulated during the 1996 to 2014 period.
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.
The industry is supposed to revalue their assets and redistribute the valuation gains for pre-2009 so as to compensate pensioners for the period.
“The recommendations of the commission need to be implemented otherwise the amendments are useless. There should be compensation for loss of value when the country switched currency in 2009. Some workers lost a lifetime of savings in the form of pensions. Someone retiring just after March 2009 was told your pension disappeared during the inflationary period but buildings that were bought remained with value. That was daylight robbery,” Moyo said.
Ipec has been widely accused of failing to intervene to correct market failures and guide the industry and institute financially sound systems and procedures.
“The industry players trampled on reasonable benefit expectations of its customers leading to loss of value. Poor corporate governance, arbitrary benefit calculations, shambolic record-keeping and unsustainable expense ratios, among other ills became prevalent in the industry, with policyholders and pension fund members bearing the brunt of such excesses,” the commission said in its findings.
Members of the Employers’ Confederation of Zimbabwe shot down a proposal by the Ipec to regulate Nssa in 2018, arguing that there was already enough regulation of the parastatal.
Contacted for comment Nssa marketing and communications executive Tendai Mutseyekwa said the ministry of labour was the best to deal with that question.
“Those kinds of questions can be best addressed by the Ministry of Labour. We fall under the Ministry of Labour,” he said.
Nssa, whose investment portfolio is valued at ZW$30,48 billion (US$367 million) by Ipec, has a diverse property portfolio comprising industrial, commercial, residential, medical facilities and land banks earmarked for future development.