THE Insurance and Pensions Commission (Ipec) Amendment Bill, which is meant to promote disbursement of fair pensions was inaccurately drafted and flawed, legal think-tank Veritas has revealed.
In its latest Bill Watch publication critiquing the Bill, Veritas urged Parliament to address the inaccuracies in the Bill before it becomes law.
The Bill will give the Insurance and Pensions Commission (Ipec) an oversight role over State-run pension funds such as the National Social Security Authority (Nssa) and medical aid societies, among others.
It also proposes to amend the Pensions and Commissions Act in that a new section, 3A, will be inserted in the Act, setting out objectives for the commission to promote the maintenance of a fair, safe and stable insurance and pensions sector for the benefit and protection of policyholders and pension and provident fund members.
When Zimbabwe adopted a multiple currency system in 2009, several pensioners and policyholders clashed with insurance firms which paid paltry benefits, claiming that they had been wiped by inflation which had reached an unbelievable 213 million percent in 2008 during the Zimbabwe dollar era.
The Insurance and Pensions Commission Amendment Bill proposes the establishment of a fund to enhance public confidence in the insurance and pensions sector for the benefit of the economy as a whole.
But Veritas said the Bill was defective in several respects.
“In addition, the errors and defects should be remedied. The Bill should amend the long title of the Act to reflect the establishment of the fund. The Bill’s memorandum does not explain what these definitions are for, but the intention seems to have been to change the title of members of the board to directors,” the legal think-tank said.
“In clause 13, the provisions for determining when an insurer or pension fund becomes insolvent (and thereby entitling policy holders or members to compensation) needs to be clarified: there is no provision in the Insurance Act or the Pension and Provident Funds Act for entities to be “declared to be of unsound financial position”, as stated in the Amendment Bill.”
It said Parliament should fine-tune the Bill.
Meanwhile, Public Service, Labour and Social Welfare minister Paul Mavima has approved a recommendation made by the Nssa board to implement a self-adjusting mechanism for pay-outs of pension benefits, which will see them pegged against the Reserve Bank of Zimbabwe’s auction rate, with effect from January 1, 2022.
The current minimum pension payments are pegged at the equivalent of US$60 and US$70 for the Pension and Other Benefits Scheme, and the Accident Prevention and Workers Compensation Scheme, respectively.
Nssa general manager Arthur Manase on Wednesday said although the compulsory pension fund increased benefit levels to the desired US dollar equivalent in January, the amounts that were paid fell short due to disparities between the rate that was used on conversion and the one prevailing on payment date.Newsday.