Published: 19 May 2025

The Insurance and Pensions Commission (IPEC) has secured payment agreements with employers who have been defaulting on pension contribution remittances, a move aimed at tackling rising arrears in the local pensions sector.

Addressing delegates at the Zimbabwe Association of Pension Funds (ZAPF) 50th annual conference held in Victoria Falls on Thursday, IPEC's actuarial director, Mr. Robson Mtangadura, revealed that the regulator has prioritized engagements with the top 50 defaulting employers, responsible for approximately 80 percent of outstanding contribution arrears.

"We have already started engaging with defaulting employers. At the end of the first quarter, we engaged with the top 50 defaulting employers," Mtangadura said. "The good thing is that some of them have already submitted payment plans, which they have started to adhere to. If they default on those plans, we will move to garnish their bank accounts."

This stern stance comes as pension contribution arrears continue to pose a serious threat to the sustainability of Zimbabwe's pensions industry. Official data from the end of 2024 indicates that total pension arrears, including backlogs from prior years, have surged to US$268 million  -  a sharp rise from US$64.8 million recorded the previous year.

A significant portion of the arrears, approximately US$45 million, is linked to employers deducting contributions from salaries denominated in foreign currency but failing to remit these funds to pension schemes, the regulator reported.

IPEC's director of pensions, Mr. Cuthbert Munjoma, noted that most defaulting employers are parastatals, compounding the challenges faced by the industry.

Zimbabwe's pension funds are grappling with multiple difficulties, including the unresolved loss of pension value, which has led to beneficiaries losing a significant portion of their savings. Other challenges include poor governance, inadequate skills within fund management, weak risk management practices, and the persistent problem of high contribution arrears.

Investment strategies have also been a weak point, with many pension funds struggling to generate sufficient returns, further eroding the value of retirement savings.

Highlighting the importance of sound governance, World Bank lead financial specialist Fiona Stewart, speaking at the same conference, emphasized that effective oversight is critical for achieving diversified investment portfolios and ensuring the long-term viability of pension funds globally.

On the benefits front, IPEC acknowledged that pension payouts remain far below expectations and are insufficient to significantly impact beneficiaries' livelihoods.

"Three years ago we introduced a benefits tracker that monitors pension payouts monthly and quarterly," said Munjoma. "Unfortunately, benefits are not meeting reasonable expectations, primarily due to the adequacy of contributions and sustainability challenges. We have initiated reforms but recognise that a more holistic approach is needed."

As of the end of 2024, Zimbabwe's pensions industry comprised 967 registered occupational pension funds. Of these, 489 are active, accounting for 50.6 percent of the total, while the remaining 478 funds are inactive. Among the inactive funds, 372 are set for dissolution, pending the resolution of pre-2009 compensation issues.

With rising arrears and governance challenges threatening the sector's future, IPEC's firm approach to recovering outstanding contributions and calls for comprehensive reforms signal a critical juncture for Zimbabwe's pensions industry.
- the herald

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