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‘Pensioners, insurance holders lost quadrillions during dollarisation’

PENSIONERS and insurance holders lost quadrillions of their Zimbabwean dollar investments during the process of conversion of the Zimbabwe dollar to the United States currency, Parliament heard on Monday.

BY KUDZAI MUCHENJEKWA

The issue was revealed by the Commission of Inquiry into the Conversion of Insurance and Pension Values from the Zimbabwe dollar to the United States dollar, which said most of their Zimbabwean dollar investments suddenly turned into a few US cents or dollars.

The commission, chaired by Justice Leslie George Smith, had appeared before the Parliamentary Portfolio Committee on Finance to speak on their findings.

Commissioner Godfrey Kanyenze told the committee that their investigations covered a 20-year period from 1996 to 2015, examining the regulatory, financial and governance affairs of 11 life insurance companies, nine funeral insurers, four independent pension administrators, 15 stand-alone pension funds, the National Social Security Authority, the Government Pension Agency and the Insurance and Pensions Commission.

Kanyenze said the commission conducted public hearings in all provinces in the country from 2015 to 2016, where they received complaints from members of the public, and insurance and pension organisations.

“The inquiry revealed that loss of value in insurance and pension benefits mainly occurred before the conversion from the ZW$ to US$ and dollarisation only revealed the extent of the loss,” he said.

“The exchange rate of US$1 to ZW$35 quadrillion, which was used when the ZW$ currency was de-monetised in 2015, prejudiced insurance policy holders and pensioners, and it reduced the already worthless ZW$ values that had been deposited in individuals’ bank accounts to just a few US cents, or at a maximum, US$5,” he said.

MPs from the committee, led by David Chapfika, said there was need for the issue to be followed up because it affected a majority of Zimbabweans.

Some of the factors which were said to have caused the loss were macro-economic such as inflation, currency de-basing, and the exchange rate used during de-monetisation of Zimbabwe dollar to US dollar in 2015.

Other factors were said to be negative real investment returns on fixed income securities such as bonds, Treasury Bills and money-market instruments which resulted in loss of value resulting in insurance companies and pension funds divesting from such investments during the period 2001 to 2008.

“The removal of 25 zeros (currency de-basing) during the period 2006 to February 2009 resulted in insurance companies and pension funds technically extinguishing their obligations to policy-holders and pensioners without any actual payments being made.”

They said after the removal of the zeros this resulted in abnormally low ZW$ benefit values which, upon conversion to US$ were for some pensioners as low as US$0,05, and in most cases zero, despite years of people contributing to pension funds.

Source :

NewsDay

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