Will average pensioner survive the year?

AS the economy continues to deteriorate, the ordinary pensioner hopelessly sits on their couch or by the veranda wondering if they will make it to the end of the year in one piece. Prices of basic goods continue to shoot up in the local supermarkets, with bread now fetching as much as US$1.34 from the US$1 the citizens were used to.
Pensioners in their old age will now also hold on dearly to their spectacles even if the lenses expire as it will cost them a minimum of 20 percent more to replace the expired or damaged ones.
The parallel exchange rate now is now as high as US$1:ZW$ 14 000. That’s close to a 100 percent premium from the latest auction rate figures produced by the Reserve Bank of Zimbabwe. The apex bank knows that if it pumps more liquidity in the economy and prints more money all hell will break loose.

Musawenkosi RC Dzheka

They are stuck between a rock and a very hard place. ZW$ cash value has been eroded to an extent where it is being used more as small change than the main dominating currency for high grade transactions.
Against this background, pension funds are working day and night to produce their compensation schemes as per the requirements of S.I 162 of 2023. If the economy continues to go down this trajectory, the whole exercise might end up losing steam although it had been initiated as a result of noble intentions by the government. Let’s delve into a bit more worrisome stats.
According to the IPEC 2023 Q3 Pensions Report, the pensions industry comprised 969 registered occupational pension funds as at September 30, 2023 compared to 988 funds as at September 30, 2022. The decrease was mainly a result of funds whose dissolutions were finalised and transferred to umbrella funds. Of these 969 registered funds, 496 were active, constituting 51 percent of the industry’s funds while the remaining 473 were inactive. A total of 356 funds out of the 477 inactive were undergoing dissolution.
The industry is slowly dismantling. 35,260 pensioners were being serviced by the industry as at September 30, 2023. Deferred pensioners amounted to 436,776 and they constitute 45 percent of the industry’s 967,756 members (excluding beneficiaries). This means for some reason the majority of the pensioners are choosing not to collect their pension and let it accumulate a bit more.
Contribution arrears stood at ZW$219.18 billion, which is approximately US$40.03 million using the exchange rate at reporting date. This is a third of the contributions the industry expected to receive by September 30, 2023.
Some sponsoring employers are not remitting contributions to their pension funds. Are they to blame considering how things have been playing out in the industry?
The slow death of the pensions industry is something everyone should be worried about because of the way pension funds money is scattered across different sectors of the economy. Some call this a long-winded argument but it is the truth. The spillover effects that arise from the dismantling of the pensions industry are detrimental. The industry’s assets as at September 30, 2023 stood at ZW$10.62 trillion. Investment properties amounted to ZW$5.85 trillion. In 2023, pension funds had approximately ZW$2.22 trillion (22 percent of ZSE market cap) invested in quoted equities as at September 30, 2023.
The industry has been increasing its investments in asset classes like the Mosi- oa-tunya gold coins and the digital gold backed tokens as a way to hedge against the volatile economy. We have seen the bold efforts of the NRZ Pension Fund to list the second ever Real Estate Investment Fund in an attempt to repurpose its investment property and improve its liquidity position as a matured fund for the benefit of its members. In the background of all of this we have pensioners at the end of the value chain crossing their fingers and hoping that they will be remitted the fruits of years of good labour in light of this deteriorating economy and industry. What can we do to give them hope?  By Musawenkosi RC Dzheka

● Dzheka is a financial research analyst. He is undertaking his Bachelor of Technology Honours Degree in Financial Engineering with the Harare Institute of Technology. He writes in his personal capacity and can be reached on 0772688574/0733358154 or raychiwawa@gmail.com