Zimpapers Logo

Tawanda Musarurwa Senior Business Reporter
Zimbabwe’s pension funds and insurance companies are now required to make public their financial results, among other new disclosure procedures to create more openness around their operations.

These entities hold billions in pensioners’ and insurance clients’ monies and openness around how they run their finances is critical to ensure protection of these funds.

Said Insurance and Pensions Commission (IPEC) Commissioner Dr Grace Muradzikwa:

“We have issued disclosure guidelines for both insurers and pension funds. In terms of the disclosure guidelines we would like, first, for insurance companies to publish their financial statements. This was not a requirement before.

“We think it’s also part of treating customers fairly; policyholders need to know the robustness of the entities that they are dealing with, so it’s important that their financial statements should no longer be a boardroom table issue but that they should be in the public domain.”

Part of the observations made by the Justice Smith Commission of Inquiry into the Conversion of Insurance and Pensions Values from Zimbabwe dollar to United States dollar were that the regulator failed to intervene in order to correct market failures and guide the industry and thus resulted in failure by the industry to institute financially sound systems and procedures.

“Some of the disclosure guidelines especially around pension funds are speaking to their expenses. We would like more disclosure around expenses because policyholders need to know how their contributions are being expensed,” added Dr Muradzikwa.

During 2019, IPEC issued 10 circulars giving guidance in various areas.

The regulator’s capacities in this respect has been enhanced by Statutory Instrument 69 of 2020, which was promulgated earlier this month.

SI-69 of 2020 — Insurance and Pensions Commission (Issuance of General Guidelines and Standards) Regulations — reads:

“Whenever the Commission considers it necessary, convenient and in the best interest of policy owners, and pension and provident fund members, the Commission may issue out general guidelines and standards. . . Compliance with any general guidelines and standard issued by the Commission, shall form part of the audit of the entity and shall be reported upon in the annual audited accounts required in terms of the Insurance Act (Chapter 24:07) and Pension and Provident Funds Act (Chapter 24:09).”

And firms that fail to comply with IPEC’s guidelines “shall be in default and liable to a fine not exceeding level 4 (ZWL 1500) for each day that the contravention continues up to a maximum of sixty days.”

The regulator has also since issued out guidelines around revaluation of assets and liabilities by the insurance and pensions industry after a currency conversion.

“We issued guidelines on adjusting insurance and pensions liabilities in line with the currency reforms that we saw in 2019. You will recall that in 2019 we had four currency policy changes, and these changes had an impact on pension liabilities,” said Dr Muradzikwa.