Source: Govt owes Zisco pensioners US$38m -Newsday Zimbabwe
THE Finance, Economic Development and Investment Promotion ministry is reportedly in arrears of US$38,7 million owed to ZiscoSteel pensioners.
A parliamentary portfolio committee report revealed discrepancies in the handling of pension funds following the country’s currency changes and ZiscoSteel’s failure to remit pension contributions.
The Parliamentary Portfolio Committee on Budget, Finance and Investment Promotion’s report detailed how pensioners were prejudiced when the country moved from the US dollar to local currency.
ZiscoSteel had deducted pension contributions in US dollars (from 2009 to 2016), but failed to remit to First Mutual Life (FML).
According to the report, the government assumed the debt and paid ZWL$39,2 million in 2021, using a 1:1 exchange rate.
However, the interbank rate at that time was US$1:ZWL$90.
This discrepancy has resulted in the significant shortfall.
The committee’s report also highlighted failure by FML to manage the pension fund and criticised the Insurance and Pensions Commission (Ipec) for regulatory failure between 2009 and 2017.
“That the Ministry of Finance, Economic Development and Investment Promotion paid the US$39,1 million in 2021 using a rate of 1:1 in accordance with the law. However, the interbank rate had moved to 1: ZWL90 in 2021,” the report read.
“The ministry could only settle the pension fund (debt) after the enactment of Zimbabwe Iron and Steel [Debt Assumption] Act, 2018 despite pension funds having been due in 2016.
“The ministry has put in place Statutory Instrument 162 of 2023, Pensions and Provident Funds which seeks to compensate for the loss of pre-2009 value of pension benefits to actualise the Justice Smith Report’s recommendations of March 2017. However, the statutory instrument is gathering dust in terms of actual implementation.”
The report said a 2018 actuarial valuation revealed a debt of US$61,5 million, indicating a shortfall of US$22,5 million.
The 2018 actuarial report came after Parliament had passed the Zimbabwe Iron and Steel (Debt Assumption) Act.
“The Ministry of Finance, Economic Development and Investment Promotion and Ipec should actualise the implementation of Statutory Instrument (SI) 162 of 2023 by December 2025,” the report said.
“Given the fact that the Ministry of Finance released ZWL$39,2 million when the rate was 1:90, it means that the Ministry of Finance owes US$38,7 million, which should be paid to the pensioners at the prevailing rate,” the report read.
Additionally, the committee is pushing for the amendment of the Zimbabwe Iron and Steel (Debt Assumption) Act of 2018 to align with the findings of a 2018 actuarial valuation report.
The report said the Finance ministry should immediately actualise the implementation of the Justice Smith Report guided by SI 162 of 2023 with respect to the 2008 occurrences, SI 133 of February 2019 and occurrences in the macro-economic environment.
Ipec, as the regulator, should act on all its omissions and commissions as well as strengthen the commission.
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