Editorial Comment: Pensions inquiry a progressive move

The appointment of an eight-member commission to probe the conversion process for insurance contributions and pension benefits is a move long overdue.

The members of the commission were sworn in by President Mugabe on Thursday and their mandate is to investigate what happened in the pension and insurance industry since dollarisation in 2009.

The appointment of such a commission was long overdue considering how pensioners have been languishing in poverty due to the pittances most of them received as contributions under a murky Zimbabwe-to-US dollar conversion process.

We applaud President Mugabe for responding to the plight of pensioners, some of whom worked for many years investing their earnings in pensions and insurance schemes, but all of a sudden find themselves getting pitiful monthly sums to survive on.

We do not buy the explanation being advanced by pension funds that all workers’ pensions and insurance contributions were blown away by inflation.

This is because most of the pension funds and insurance companies made huge investments in immovable assets using the contributors’ funds.

After dollarisation, these assets continue to maintain their value. While the original contributions were not in US dollars, we believe fund managers made prudent investments to make high returns in a dollarised environment and that should translate into better benefits for pensioners and policyholders.

We are not trying to influence the work of this commission, but one of its top assignments should be to establish if pension fund members or insurance policyholders were not materially prejudiced.

There is also hope for relief by the pensioners and policyholders as we expect the commission to come up with mechanisms for appropriate compensation in cases where injustice occurred.

Among the commission’s terms of reference is the need to establish the total value of pensions as at December 31, 2006 and as at March 31, 2009.

That value should be used to determine how to convert the pensions to United States dollars.

This should bring hope to thousands of pensioners who have been locked in a bitter stand- off with insurance companies over the payments. We believe insurance companies are also keen to keep a good name and to also restore confidence in the sector by being good corporate citizens interested in fair play.

There are reports of pensioners who worked for up to 50 years and are getting as little as $10 per month from their insurance policies.

Such cases leave the pension funds and insurance firms with a lot to explain.

We expect the commission of inquiry led by retired judge Justice George Smith to go beyond merely investigating the conversion rates.

The commission must broaden its work to look at the Pensions and Provident Act to ensure that workers are empowered to have a say on how their money is invested to reduce cases of corporate fraud.

By appointing the commission, President Mugabe clearly demonstrated that he wants to resolve the plight of pensioners and the distress caused by the skewed conversion of their pensions. This move alone has already brought smiles to thousands of pensioners.

We hope that after the exercise, which is expected to be concluded shortly, the commission will be able to produce a report that makes it clear where things went wrong.

The best the pension funds and insurance firms can do is to co-operate with the commission to ensure that fairness prevails in the sector.

It is most important that the commission will look into the process, methods and criteria used to convert values from Zimbabwe dollars to US dollars.

The commission will also identify appropriate criteria for assessing whether any pension fund members or insurance policyholders were prejudiced.

Based on the findings, they will establish the extent of the prejudice and the compensation, if any.