FIRST Mutual Holdings Limited (FMHL) chief executive officer Douglas Hoto says Zimbabwe urgently needs to rebuild confidence in the pensions sector, describing it as the foundation for sustainable growth in life insurance and long-term savings.
Speaking during a recent financial performance briefing, Hoto noted that while the group’s life business remained profitable, buoyed by funeral and group life insurance, the pensions segment continued to struggle with structural challenges.
According to the Insurance and Pensions Commission’s first-quarter report, pension contribution arrears surged by 37% to US$93 million, up from US$68 million in the previous quarter.
The arrears reflect companies’ preference to channel scarce resources towards immediate operational needs, such as wages, suppliers and utilities, amid inflationary pressures, exchange rate volatility and a shrinking formal sector.
“Pension contributions are generally low in Zimbabwe, not just at First Mutual,” he said.
Contributions at First Mutual Life stood at around US$6 million for the first half of the year.
“Strategically, that number is far too low. We would like to see it double or even triple, but the key lies in rebuilding trust with the market, given the history of pension value losses in the country,” Hoto said.
He was referring to the devastating 2009 pension value losses, when Zimbabwe abandoned its local currency in favour of a multi-currency system. The transition rendered Zimbabwe dollar-denominated savings nearly worthless, leaving pensioners and contributors with little to no value.
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The scars of these past pension losses, Hoto noted, have left many Zimbabweans sceptical of retirement products, limiting participation and weakening the long-term savings culture.
“The conversation around pensions is not yet closed at the national level. As First Mutual, we cannot solve it alone. We expect authorities to make pronouncements soon; they may not be popular, but they could help bring closure,” he added.
To bridge the trust gap, Hoto highlighted First Mutual Life’s ongoing product innovation aimed at delivering tangible value and security. On guaranteed funds, he defended their relevance for retirees with low risk appetite.
“The guaranteed fund has outperformed, but the real question is always, what is being guaranteed? These funds protect capital for pensioners who can no longer absorb the volatility of market-linked investments,” Hoto explained.
At the same time, he emphasised that pension savers should not be confined to guaranteed funds alone.
“We also provide market-linked funds for those who are willing to take risks for potentially higher returns. But we make sure clients understand the trade-offs before making their choices,” Hoto said.
Despite the sector’s challenges, he reaffirmed FMHL’s commitment to strengthening its life and pensions business, while urging broader policy interventions to restore confidence.
“Pensions are a tough area in Zimbabwe, but there is a way forward. Confidence is the foundation, and with the right products and national policy support, growth is possible,” Hoto said.
