THE Insurance and Pensions Commission (Ipec) has directed small pension funds to voluntarily merge or risk forced consolidation, citing concerns that unsustainable schemes may fail to provide adequate member benefits.
Speaking at the Zimbabwe Association of Pension Funds (ZAPF) annual congress in Victoria Falls on Thursday, Ipec pensions director Cuthbert Munjoma revealed that some funds have as few as 10 to 20 members, making them economically unviable due to high administrative costs.
"We have been pushing for consolidation through moral suasion, but progress is unacceptably slow," Munjoma said.
"If the industry does not self-correct, we will be left with no choice but to intervene forcefully."
Munjoma pointed to Ipec's benefit tracker system, introduced a few years ago, which shows pensions are not meeting reasonable expectations despite tracking asset performance.
"We continue monitoring what we call our 'bread index' - which measures the actual purchasing power of pensions being paid," he explained.
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"The results show we have serious challenges in delivering meaningful benefits."
Munjoma identified multiple structural issues plaguing the sector, including unsustainable contribution rates as high as 33%, poor governance in preservation funds holding deferred pensions, cases of employers illegally holding pension fund assets, and fragmented administration with duplicate IT systems.
He noted particular concern about finding pension fund assets registered in employers' names rather than the funds themselves.
Ipec is taking concrete steps to force reform, including issuing new preservation fund governance guidelines within weeks, developing a centralised IT system to replace costly imported platforms, and implementing electronic supervision to monitor funds in real-time.
The regulator first proposed consolidation three years ago but has seen little progress, with 80% of pension funds still using expensive imported IT systems.
Running under the theme “50 Years Together: Shaping Tomorrow, Today. Building on the Past, Embracing the Future,” the congress brings together industry leaders, policymakers, and experts to reflect on Zimbabwe’s pension evolution and explore innovative strategies for the sector’s future.
It ends on Friday.
