Arrears drive self administered funds Q4 contributions – IPEC

Arrears drive self administered funds Q4 contributions – IPEC

By Bernard Mpofu, HARARE, April 8 (The Source) – Zimbabwe’s self administered pension funds have reported a 29 percent growth in contributions to $505 million for the fourth quarter ending December compared to last year spurred by payment of arrears , a regulator’s report has shown.

The Insurance and Pension Commission (IPEC) report covering 14 standalone funds, four fund administrators and four life insurers seen by The Source on Wednesday, the underperforming economy has resulted in companies defaulting on their contributions, a development that could leave pensioners without life savings.

The commission expressed concern over an increase in arrears during the period under review. Employers contributed $58 million or 18 percent of total contributions (December 2013:19 percent or $41 million) while active members paid $39 million or 12 percent of total contributions (December 2013:23 percent or $50 million).

“This reflects a challenging environment in which sponsoring employers are operating. The Commission implores employers to remit deducted contributions as failure to do so is illegal and fraudulent,” said IPEC in the report.

“The Commission, however, noted that 70 percent of total contributions or $221 million was made up of arrears (December 2013:58 percent or $124 million) which employers attribute to liquidity and viability challenges in the economy which has inhibited employers’ ability to meet statutory and operational obligations. IPEC will continue to engage stakeholders in an effort to come up with a feasible solution.”

Total contributions amounted to $220 million (December 2013:$222 million) while benefits disbursements amounted to $123 million from $99 million paid in the comparative period last year.

Total assets grew by 15 percent from $1,8 billion  in 2013 to $2,1 billion as at 2014 year-end. Funds invested four percent of their resources in prescribed assets, much lower than the regulatory 10 percent, IPEC said.

Total fund membership from the prior year remained flat, suggesting a challenging employment environment.

There were 201,000 active members who contributed 56 percent while deferred pensioners increased by five percent to 69,000. The number of inactive pensioners remained static at 67,000 while 20,000 were drawing pension benefits, IPEC said.