Pension sector contracts 50%: Ipec

ZIMBABWE’S pension industry is contracting amid signs that 50% of the country’s 965 pension funds are inactive, the Insurance and Pensions Commission (Ipec) has said.

Highlights of growth trends show that since 2020, pension industry assets have been declining along with a number of active pension plans.

“We are saying that we have 965 pension funds. Our concern is that, of them, 50% are inactive. What does it mean to be inactive? There are no contributions coming,” Ipec director of pensions and life Cuthbert Munjoma said at the 49th annual conference of the Zimbabwe Pension Funds Association in Victoria Falls last week.

“People have just said, ‘we have a fund, we preserve our benefits until retirement.’ So that’s a sign that things are not good because actually new money should come in, some more will retire and this is self-perpetuating.”

Munjoma said the industry had also witnessed a drop in contributions from a high of $220 million to $125 million, as well as partial withdrawals due to increased job changes affecting backlog.

He further explained the crisis facing the pension industry saying: “If you profile the assets in dollar terms, they range between $1.6 billion and $2 billion. We had a presentation from an actuary who showed figures higher than these. From 2012 to date, if we just edit the contributions, they are much more than the $2 billion in assets we have today.

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“So it means something in terms of asset creation and the value of new assets that are purchased. These are old actions. If you meet the old men, the old women will point out that these things were done during our time.

“Where does the new money go? We cannot argue that he is going to pay, but rather that he is paying them. We are again concerned about the trend of assets. From the members’ point of view, we are also concerned that our industry is less than a million dollars.”

The industry has also experienced low consumer confidence, with limited growth due to legacy issues that remain unresolved.

“In fact, it shows that many people are discovered. If then, as a percentage of informal employment, you can see that this industry is not reaching many more people. In line with national aspirations for financial inclusion, more people would be expected to have pension plans,” he added.

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