Zimbabwe: Unclaimed Benefits Jump to U.S.$2.5 Billion

THE Insurance and Pension Commission (IPEC) says unclaimed benefits increased significantly to $2.5 billion during the third quarter to September 30, 2021, driven by revaluation gains on assets supporting such liabilities. In its quarterly report, IPEC said the increase in unclaimed benefits during the period under review represented 1 175 percent increase from $0,20 billion in 2020.

An unclaimed benefit is any lump sum or pension benefit that is due to a retirement fund member (or his/her beneficiaries) that has remained unclaimed for a period of time.

The fund’s rules provide that the member can claim this amount, the fund can pay these unclaimed benefits into a pension or provident fund, and the member or his or her beneficiaries can claim the unclaimed benefit.

“Furthermore, there was also an increase in members with unclaimed benefits by 3,93 percent to 161 019 from 154 927 reported in the same period last year,” read part of the report.

IPEC noted that it was concerned with the high number of members with unclaimed benefits and encouraged the industry to intensify efforts to locate the beneficiaries.

In the period under review, there were 982 registered occupational pension funds compared to 961 funds reported as at September 30, 2020 with the increase on account of new fund registrations.

Total income for the industry increased to $87 billion compared to $59 billion in 2020 mainly driven by fair value gains, interest from investments and total contributions amounting to $77,48 billion.

“These three income streams constituted 50 percent, 25 percent and 13 percent, of the industry’s total income, respectively,” Ipec said in the report.

However, total expenditure increased by 317,89 percent from $2,18 billion for the period ended 30, September 2020 to $9,11 billion as at September 30, 2021.

The increase was mainly driven by total benefits paid, administrator expenses and investment management expenses, which accounted for 64,76 percent, 8,41 percent and 7,37 percent, respectively.

“Expenses to contributions ratio was 23,54 percent, whilst the expenses to total income ratio was 3,10 percent for the year ended September 30, 2021.

“Furthermore, expenses to realisable income also increased to 7,34 percent from 3,11 percent reported during the same period in the previous year.”

Ipec said it is concerned with the general increase in expense ratios as they negatively impact on the amount that is available for investment, ultimately reducing the retirement benefit for members.

“In order to curtail expenses, the commission has issued a framework to regulate expenses, which will be effective from January 2022 for implementation within 6 months from the effective date,” the regulator said.

IPEC also noted that out of the registered 982 pension funds, 30 Funds received contributions in US$.

It said for the period January to September 2021, contributions and other foreign currency receipts by the funds amounted to US$10,65 million whilst total expenditure for the same period amounted to US$0,43 million.

“The total assets for these funds stood at US$10,96 million as at September 30, 2021 and the asset portfolio of these funds is mainly dominated by money market instruments (57 percent), with 19 percent being held as cash at bank.”