The back log of pension contribution arrears currently stand at more than $600 million hampering economic development, Finance and Economic Development minister Mthuli Ncube has said.
Pension funds play a pivotal role in economic development through its primary role of allocating pensioners’ contributions into securities, real estate, hedge funds, bonds, stocks, equities and other alternative investments.
Speaking at 44th Annual Congress of the Zimbabwe Association of Pension Funds in Victoria Falls Thursday afternoon, Ncube said government is concerned with the pension contribution arrears.
An effective and efficient pension fund industry contributes to the acceleration of a country’s economic growth.
“Government shares the concern that the industry is plagued by contribution arrears, which currently stand at more than $600 million,” he said.
“The high level of contribution arrears reduces the level of investible assets for pension funds and heightens the liquidity risk in the industry which impinges economic role of funds,” he said.
Ncube said the development of the economy depends on private sector which is reinforced by pension funds.
“Let me highlight that it is widely agreed that the bulk of investment to be made in buildings and physical infrastructure in the next 40 years will come from the private sector and that is mainly the pension funds,” he said.
Ncube urged Zimbabwe Association of Pension Funds (ZAPF) to continue to engage with Insurance Pension Commission for the betterment of the economy.
The pension industry has an asset base of $5 billion as at December 31 2018.
“I urge the ZAPF to continue its positive engagement with IPEC and all other key stakeholders in the pension fund industry to ensure that the sector continues to stimulate economic growth and development,” he said.
Nube insisted that Government was committed to ensure that all the necessary legislative amendments to enforce and guide the various pension reforms pronounced in the TSP (Transitional Stabilization Programme) and 2019 National budget Statement are underway and the facilitation of smooth implementation of recommendations of the Commission of Inquiry.