Policyholders and pensioners who are feared to have lost the value of their investment in the conversion to US dollars from Zimbabwean currency in 2009 could be compensated if proposals in the new legislation are implemented. Finance Minister Patrick Chinamasa had already set in motion the process by introducing legislation to facilitate the setting up of a commission to look into the unsavoury happenings that resulted in many losing value on their hard earned savings.
The legislation promulgated last year sought to probe the role pension funds and insurance firms played in the financial prejudice, other than what went wrong, why and how that happened, as Zimbabwe exited the decade long economic tailspin.
However, Statutory Instrument 1 of 2016 proposes, among other legal provisions, establishment of the basis for compensation where pension fund members, insurance policyholders or their intended beneficiaries are found to have been materially prejudiced.
While this had been the longing and expectation in many quarters, there had not been legislation yet, explicitly stating that after the probe of what transpired and causes thereof, the victims of that economic and financial cancer would get back their value.
Insurance policyholders and pension fund members are feared to have lost significant value when Zimbabwe transitioned to a basket of currencies dominated by the greenback.
But now, there will be a process first to identify the appropriate criteria for assessing whether any pension fund members or insurance policyholders have been prejudiced and based on this, establishment of the extent of the value lost in the conversion.
“Where it has been established that pension fund members or insurance policyholders have been materially prejudiced, to establish an appropriate basis for compensating such pension fund members or insurance policyholders or beneficiaries of such persons,” an excerpt from amendment of proclamation 8 of 2015 says.
The law provides for investigation of the financial soundness of Zimbabwe’s insurance and pension industry before and after the conversion the Zimbabwe dollar era to US dollar or multi-currency system.
“If any financial unsoundness is established, to identify the causes thereof, and to establish how the financial soundness of insurance and pensions industry can be resolved,” the provisions say, adding failure of regulation, Governance and oversight in running funds and monitoring will also come under scrutiny.
Further, the law seeks to provide framework for probing the relationship between insurance and pension funds and the rest of the financial services sector and the economy during and after conversion, then benchmark it with international best practices.
The amendments also provide establishing nature, type and value of assets acquired by insurance companies and pension funds before and after conversion from Zimbabwe dollar to US dollar.
There shall also be probe into factors, causes and reasons for the loss of value of policyholder and pension fund benefits during conversion from the ravages of the hyperinflation era in Zimbabwe.
The earlier promulgated legislation also sought to “more fully, give a breakdown of those causes, reasons, factors and to provide a weighting of the same in terms of their individual contribution to the loss of insurance and pension benefits values and to investigate fully the role of insurance companies, pension funds and other key service providers during the conversion”.