HARARE – After working for 31 years at the government’s Immigration department, Lawrence Chisango, walked away empty-handed.
Even though he started working in 1964, he has nothing to show for all his efforts.
This is despite the fact that he faithfully contributed to a monthly pension scheme, an investment he hoped would one day cushion him in old age.
When he left the Immigration department in 1995, he opted not to take his pension because he was running a sustainable business which catered for his daily needs.
He however, took part of his pension which was equivalent to $4 000 from his contributions, which had amounted to about $26 000 at the current exchange rate.
“I was wooed by a certain insurance company (name supplied) and I gave them my money after they promised me heaven on earth but now they are saying they do not have my record,” Chisango, who has been applying for his pension since May last year, said.
The senior citizen, who is now living in abject poverty after the insurance company failed to remit his pension, is just one out of thousands of people who have failed to access their pensions.
Frans Meyer, an 80-year-old veteran who worked for the National Railways and holds four retirement annuity policies where his wife is also a beneficiary, is also finding it difficult to access his pension which stopped early 2003.
“My pension stopped in early 2003. They ignore all forms of correspondence and appear to be a law unto themselves,” Meyer told a Zimbabwe Pension Petition report published by Sean MacNally.
Josh Wella, 70, of Bulawayo only received $3 and $2 from two separate pension funds after making monthly contributions since 1989.
Other pensioners who are finding it difficult to access returns on their investment include workers from; Zimbabwe Broadcast Corporation (ZBC), Reserve Bank of Zimbabwe (RBZ), Rufaro Marketing and Clothing Industry Fund among others.
What was supposed to be a peaceful hard-earned end to a working life has turned out to be a living nightmare for most pensioners as insurance companies continue to cite one reason or the other for not honouring their commitment to pay out pensions.
This has seen a good number of pensioners who started working during the Rhodesia era, living a destitute life.
Although the British government employed most of these pensioners, it has only intervened concerning Zimbabwean pensioners of British origin, leaving the rest to their own fate.
In 1998, there were an estimated total of about 1 200 Rhodesia/Zimbabwe pensioners.
Some of the well-to-do pensioners have since immigrated in search of greener pastures but a good number of them are wallowing in poverty as they fail to access their investments.
The plight of Zimbabwean pensioners come as South Africa’s trade union Cosatu’s investment arm, Kopano ke Matla, is being accused of plundering millions of Rand from an employee pension fund.
The scandal has seen Kopano Employee Benefits, one of the companies under Kopane Ke Matla being stripped of its licence to handle pension funds.
But in Zimbabwe, no insurance company has been brought to book over irregularities in the administration of pension funds as the Life Office Association (Loa), a regulatory body tasked with protecting the interests of insurance companies has not been able to force its members to honour contractual agreements with their clients.
Speaking on a talk show in Harare recently, Paul Razunguzwa a member of Loa, said insurance companies were failing to honour the agreement as most pensions especially those in the money market funds had been eroded by inflation.
“With regards to pensions in buildings, what is counted is the rental income and you will find that in 2009 rentals and value of properties decreased.
Most properties are undervalued and most pension funds are now failing to pay pensioners,” Razunguza said.
“The only money left was in buildings and equity shares because government says 45 percent of pension contributions goes to prescribed assets and this was also wiped out during inflation.”
But Zimbabwe Pension and Insurance Rights (Zimpirt) general manager Martin Tarusenga says it is not enough for insurance companies to cite inflation because it was a process and not an event that took them by surprise.
He said inflation risk could have been managed by a process of indexation, a technique used to adjust income payments by means of a price index in order to maintain the purchasing power after inflation.
“The inflation was not an event, it was a process which they saw coming,” Tarusenga said.
“They should have developed an index to say how we manage people’s money now that the dollar is devaluating to ensure that we can give people what we promised when they signed up with us.
“This is the normal procedure elsewhere in the world where each year the insurance company is supposed to review if it can still give its client what they promised.
“Apart from that, it’s a contract you can’t say that you cannot pay someone whom you have a contract saying you will pay them $300 000.”
Tarusenga said risks such as inflation and mortality were well documented and easily accessible but it appears most insurance companies did not take into account such risks.
“There are principles and practices that should be applied to pension funds like risk management,” he said.
“They should now tell us how they managed those funds and there is also the issue of reserve funds which are put away every year. The companies should now tell us how those funds were used and avail valuation reports which are supposed to be made each year.”
Evaluation reports are supposed to be compiled every year and made available to policyholders for the purposes of keeping track with their investments. Now Zimpirt has lobbied government to make the evaluation reports submitted to it in 2012 available so that the funds can be traced.
The organisation, which has been assisting pensioners to access their investments says the insurance companies failed to use pension calculation formulae specified in the rules of the respective pension schemes, in calculating pensioner benefits.
“This is one of the reasons why they suppressed the investigation report on the correctness of benefits entitled and paid to pensioners,” Tarusenga said.
“This investigation was commissioned by the then minister of Finance in May 2012, and completed in August 2012. We also know that none of these insurance companies skilfully engaged the established principles and practices of pension fund risk management to deliver on full rightful benefits.”
He said that none of the insurance companies were adequately skilled in these areas nor did they have innovation to put in place effective inflation indices to protect the real value of pensioner benefits.
“None of them were sufficiently knowledgeable and principled enough, to boldly advise government back in the 1990s that inflation was set to reduce the value of pensions, and to decline taking on management of pension funds if government had refused to listen,” he said.
“None of them was sufficiently skilled and innovative to set in place appropriate risk management derivative instruments to counter risks of falling investment markets, to counter exchange rate risks, none of them was sufficiently skilled and innovative to set in place diversified investment markets including corporate bond markets, and active secondary such markets to counter investment concentration risks.”
But the buck does not always stop with insurance companies. Sometimes organisations also fail to remit workers’ pensions to insurance companies even though the workers get their pension deducted from their salaries.
Harare City Council, which employs in excess of 5 000 people, is said to have stopped remitting pension contributions to Local Authorities Pension Fund (LAPF) in 2003.
Progressive Pensioners Trust chief executive officer Wellington Zunde came out guns blazing at the local authority saying they were not prioritising remittance of pension contributions “while management was busy acquiring posh cars.”
This has left pensioners who were entitled to $160 per month from the pension fund vulnerable as they now only receive $20 a month which is not enough for their sustenance.
A 68-year-old former council employee who spoke on the condition of anonymity told the Daily News on Sunday she felt cheated out of her investment after contributing to the pension scheme for 30 years.
“This money is not enough for me and my family of eight,” she said.
“My two sons, their wives and their children all rely on this pension because they cannot secure employment anywhere even though they are qualified.”
She added; “I feel so cheated because every month for the past 30 years, I contributed to a pension scheme believing I would be well taken care of.”
Zimpirt has since lobbied government to intervene on behalf of the pensioners.
In May 2012, they took the matter up with the then Finance minister Tendai Biti and called for the revamping of current pension and insurance legislation, to a complete reorganisation of the regulatory and management framework of pension and insurance service provision in Zimbabwe.
In a letter written to Biti, Tarusenga said their proposal would achieve the primary objectives of
“improving the governance of pension and insurance services, minimise pensioner destitution arising from mismanagement and or abuse of pension benefit rights, introduce a management of pension and insurance funds in accordance with established principles and practices of such funds and prevent future indiscipline in pension and insurance service provision.”
On September 13 this year, Zimpirt also wrote to the current Finance minister Patrick Chinamasa appraising him of the situation and seeking his intervention on behalf of people like Chisango and prevent further pension rip-offs.