HARARE – Funeral assurers have appealed to the Insurance and Pensions Commissions (Ipec) to extend the deadline for new capital requirements due to prevailing liquidity challenges.
The Commission increased funeral policy providers’ minimum capital threshold to $500 000 from $300 000 and they are expected to be compliant by June 2014.
However, the funeral assurers, along with the service industry, have been severely affected by the liquidity crisis.
“We plead with you (Ipec) to have a soft heart as we are approaching the deadline to give those members who would have delayed to capitalise an extension,” Zimbabwe Association of Funeral Assurers (Zafa) president Edward Gomba said at the launch of the Funeral Industry Pension Fund (FIPF) on Thursday.
He said the “plea has been necessitated by the current economic constraints”.
“We depend on high employment levels for premiums. It is more challenging now because companies are failing to pay their employees’ salaries on time resulting in our clients failing to pay their premiums,” said Gomba.
He added that the funeral assurance industry now experienced more premium defaults and lapses.
Despite the economic challenges, Gomba noted that the industry had performed fairly well.
“Our presence is testimony of a fair performance. Even banks, medical aid companies have introduced funeral products as part of their product offing showing that this is the only market which no one can say no to it. Death is just like blinking and no-one can avoid blinking,” he said.
Ipec commissioner Mernat Mpofu said Ipec had “received fewer complaints from members of the public regarding the failure to meet obligations by Zafa members”, adding that “the initiative to establish a funeral industry pension fund was bold and encouraging.”
“The industry should draw lessons from older pension funds’ experiences and ensure that its members receive benefits which are in line with member expectations,” she said.
Mpofu indicated that it was imperative that the fund inculcate good corporate governance in managing the pension fund.
“Transparency is paramount and members should always be kept up to date about the financial performance and other developments on their pension funds,” Mpofu said.
She pointed out that it was disheartening “to omit to tell members about the financial status of their fund, only for them to realise just before retirement that the rainy day they were saving for over the years was a mirage or an illusion.”
This comes as market watchers have called on the need to revamp the current pension and insurance legislation, to a complete reorganisation of the regulatory and management framework of pension and insurance service provision in Zimbabwe.
Analysts say the 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.”