Former Finance Minister and Opposition legislator Tendai Biti at a panel discussion in Harare today said the issue of loss of value of pensions and insurance that was subject of the Justice George Smith’s Commission of Inquiry Report is critical.
The opposition Member of Parliament, said the loss of value of pensions is a matter of gross human rights abuse.
“The country needs to resolve that (loss of value of pensions and insurance) as a matter of urgency because it is a matter of serious injustice,” Biti said.
“I know that the country is battling with other challenges of Gukurahundi for instance; in my respect for submission, the issue of pensions must be given the same importance because it cuts across the entire spectrum of Zimbabweans life. There are millions and millions of pensioners out there.”
The issue of pensions appears in Section 71 (4) of Zimbabwe’s constitution which lays out on property rights.
Section 71 (4) reads: “Where a person has a vested or contingent right to the payment of a pension benefit, a law which provides for the extinction or diminution of that right is regarded, for the purposes of subsection (3), as a law providing for the compulsory acquisition of property.”
Subsection (3) gives conditions where a person may be deprived of property.
Biti who is also a lawyer said, “There has to be compensation (regarding the loss of value of pensions) because Section 71 of the constitution says any devaluation of a property becomes an unlawful compulsory acquisition.”
“So I would like to submit that there was an unlawful compulsory acquisition of property i.e. pensions up to until 2009, the period covered by the Justice Smith Commission of Enquiry Report and the report itself explains the causes of the loss of values.”
Justice (Rtd) George Smith Chaired a Commission of enquiry which, in March 2017, produced a Report into the Conversion of Insurance and Pension Values from the Zimbabwe dollar to the United States dollar after the demonetisation of the country’s local currency in 2009.
Speaking about the Justice Smith Commission of Enquiry Report in the National Assembly on 9th May 2018, another Former Finance Minister; Patrick Chinamasa said that one of the cited cause of the loss of value is the lack of transparency on the conversion methods, processes and formulae used by insurance companies and pension funds on the dollarization of the economy in 2009
“Most complainants indicated that their pensions were reduced from several hundreds or thousands of dollars to a few United States dollar cents. One pensioner showed a pension cheque of US$0,8c send to him by a life insurance company in 2014 as settlement of a life policy and no explanation was offered on how such a figure was arrived at,” the ruling party member said.
“With respect to insurance policy holders, they were unhappy with the small benefits which were offered as the total value of the insurance policy paid as final settlement in lieu of education policies, endowment policies or retirement annuities which amounted to between US$10 and U$40.”
Biti, from the main opposition party in the country, said the commission’s report explains the causes of the loss of values and identifies three issues which include the government’s mismanagement of the macro economic environment, the absence of a regulatory authority or the existence of a weak regulatory framework in the form of IPEC and the predatory extractive behaviour of the insurance community itself.
He said, “It’s in the government’s best interest to resolve this issue because it contributes to economic development. It contributes to Gross Capital Formation.”
Gross capital formation (formerly gross domestic investment) consists of outlays on additions to the fixed assets of the economy plus net changes in the level of inventories according to the Trading Economics.
“You can’t have gross capital formation without pensions,” Biti said.