A number of companies are not remitting deductions meant for pension fund contributions, putting into jeopardy workers retirement benefits. This has raised fears some of the funds could be directed to areas which they are not meant for in violation of statutory provisions. The illegal practice has resulted in circumstances where a number of firms are not able to settle their obligations to retirees in full and on time.
Government has hitherto been called to put in place stringent policies and tighten screws on the pension funds to curb abuse by executives. Sources in the pension funds industry said a swift move to probe the pension funds would unearth gross financial impropriety.
Given that pension funds comprise hardearned contributions of employees, it is imperative that the funds be managed with complete honesty and integrity for the sole benefit of the funds’ beneficiaries. Insurance and Pension Fund Commission head, prudential supervision, Mr Pupurai Togarepi said some firms were failing to remit both employer contribution and employees pension deductions.
The diversion of pension fund contributions and employee deduction should be done through recommendation by trustees for approval from IPEC. Further, where such diversion of funds earmarked for workers’ retirement benefits is approved, it must not exceed prescribed limits. “Any unilateral use of pension fund money by employers or companies without following procedures is not permissible and is illegal,” he said.
He said “it is a challenge both before and after dollarisation that some employers are failing to remit” what is due to pension funds. IPEC has since engaged the Zimbabwe Association of Pension Funds, administrators, pension fund trustee and Government to compel remittance.
“We have also worked with others to come up with payment plans to clear arrears. Let me mention at this point that the major cause is the economic challenges faced by sponsoring employers.” IPEC monitors activities of pension funds, through quarterly reports submitted by administrators, give indications of the status or anomalies in funds.
“A pension fund and the sponsoring company are independent entities. Any utilisation of pension funds by employers must be recommended by trustees to IPEC for approval,” Mr Togarepi said. Thousands of workers were laid off last year after the Supreme Court ruling that companies could retrench workers on three months’ notice.
Most workers had hoped they would get reprieve from the lump sum payment of their pension contributions over years. There have been calls that the Government should come up with stringent policies to protect pension funds as retirees always complain that they are getting a pittance or nothing after leaving work. – The Herald