Pensioners and life insurance policy holders will soon be compensated for losses suffered during the rebasing of the Zimbabwean dollar and the subsequent adoption of the multi-currency system in 2009.
This is part of several recommendations contained in a report presented to cabinet by the commission of inquiry into the conversion of insurance and pension values from the Zimbabwean dollar to the US dollar.
The commission was established by the government in August 2015 to investigate the extent of prejudice suffered by life insurance policy holders and pensioners in 2009.
Pensioners and policy holders incurred substantial losses when the Reserve Bank of Zimbabwe (RBZ) rebased the currency by removing the zeros.
“When we dollarised, companies did not recalculate the contributions of pensioners, therefore the need to do an investigation,” said Mr Itai Chirume, one of the commissioners of inquiry into the conversion of pension and insurance values.
“When contributions for pensions and insurance premiums are made monthly, pension and insurance companies invest the money into property, stock markets, money markets and other investments. Pensioners and policy holders become part-owners to those investments together with shareholders and this should be reflected on the balance sheets of these companies. When the country dollarised in 2009, the investments of these pensioners and policy holders disappeared from the balance sheets, leaving shareholders equity representing the assets,” Mr Chirume added.
“The pensioners, through their contributions were investing into these companies. so the indexation model should come up with a way of restoring values of these investments.
Pension funds and the National Social Security Authority (NSSA) in particular sit on billions of dollars in assets but have been paying pensioners a flat payout of $25 per month irrespective of the period each member contributed towards their pensions. Pensioners have therefore not been cushioned from the harsh economic environment with most of them wallowing in extreme poverty,” said Mr Chirume.
The recommendations of the inquiry will go a long way in resolving this injustice whilst at the same time ensuring that companies are not unjustly enriched.