Government will soon reimburse insurance and investment victims who suffered prejudice owing to the financial volatility during the lost Decade, (2000- 2010), Cabinet agreed this week.
Following the financial challenges faced by Zimbabwe and the global recession of 2008, the Zimbabwean government instituted an inquiry into the financial volatility during the time following public out cry.
“In response to the public complaints, Government commissioned the Justice Smith Commission of Inquiry in 2015, which culminated in a detailed report which was submitted in 2017 and adopted by Cabinet in 2018. In September 2018, Government then mandated the Insurance and Pensions Commission (IPEC) to implement the recommendations of the Justice Smith Inquiry.” The Minister of Information Publicity and Broadcasting Services, Senator Monica Mutsvangwa said.
The Minister also highlighted that, “Life insurance policies and pension contracts that will be eligible for the re-calculation of the benefits paid in the industry include the following: With-Profit Insurance Policies; Investment Contracts or Cash Accumulation Policies; Unit-linked Policies; Inflation-indexed Policies; Unilaterally Terminated Funeral Contracts; Terminations due to Currency De-basing; Guidance on Stopped Premiums; and Pension Products.”
The compensation shall fund for life saving products and pensioner’s who suffered prejudice with the 2009-2010 period covering the currency conversion induced changes.
“Targeted beneficiaries of the compensation are policyholders of life savings products and pensioners whose benefits were due or paid during the years 2000 to 2010. This is the period during which the macro-economic fundamentals had the most adverse impact on long-term savings contracts. The period 2009 to 2010 is meant to deal with conversions that took place in response to currency reforms.” The Chairperson of the post cabinet briefing, Monica Mutsvangwa also highlighted.
The compensation shall be funded from levy’s, shareholders assets unfair transfer’s, among other variables with the statutory provisions that will legally institute the compensation in place and soon to be announced.
“Funding for the compensation exercise will be obtained from the following sources: Re-allocation of assets from within a pension fund to address the challenge of transfer of value from older generation contributors to younger generations which has been caused by inflation; Compulsory 10% levy on assets for self-administered funds to address the misallocation of those that exited pension funds in a depressed market condition and leaving part of their assets in the fund.” Senator Mutsvangwa highlighted.
The Minister also said that “Cabinet further highlights that draft regulations to bring legal force to the compensation framework are now in place. The regulations will be issued in terms of the Insurance Act and the Pensions and Provident Funds Act. The regulations outline the process of quantifying prejudice to members in line with the type of contract, that is, Defined Benefit, Defined Contribution, life insurance savings policies and personal pensions. They also cover the calculation of prejudice for members of funds that converted from Defined Benefit to Defined Contribution.”
The response which comes as Government conformity to the ‘lost decade theory’s potentially brings a platform for the official study on Zimbabwe’s financial turns as the ‘second republic’ evaluates it’s own financial turns.