New Zimbabwe.com

Pension defaulting firms risk garnishes 

ZIMBABWE’S insurance and pensions regulator is seeking garnishing powers on companies defaulting on pension contributions as the economy continues to underperform, an official told delegates on Friday.
The underperformance of the economy has seen most companies struggling to meet tax and pension obligations, a development that experts say has seen most pensioners being prejudiced.
Finance Minister Patrick Chinamasa told journalists after the workshop that amendments to the insurance law are expected to be gazetted by the first quarter of 2015.
Insurance and Pension Commission head of supervision, Togarepi Pupurai, told delegates attending the insurance and pension legislative workshop that there was need to ensure that accrued rights of policyholders are identified and protected after government amends the law.
“A number of employers, including parastatals, are failing to honour timeous remittance of contributions and this is a serious issue on defined contribution schemes. This has resulted in lost investment income, from the fund’s perspective, resulting in poor replacement ratios,” said Pupurai.
“There is need to empower IPEC to have garnishing powers on defaulting employers. No contributions should be written off even in the circumstances where the business is sold to new shareholders as a going concern.
“Our proposal will be such that contributions in arrears should be reflected in the financial statement of sponsoring employers as a liability.”
He said IPEC should also have regulatory oversight over the National Social Security Authority to improve transparency and accountability of the scheme.
Commenting on disclosures, he said policyholders should have a legal right to readily access basic information about the pension plan, including adequate information regarding their rights to access contribution history, investment policy, rules of the fund and benefit accrual rates.
Togarepi said the commission is also pushing to become the licensing and registration custodian of pension funds and related services providers, a role performed by asset managers, to promote transparency and accountability.Advertisement