THE Insurance and Pensions Commission (Ipec) has urged employers to raise their pension contributions to different schemes for employees to have meaningful earnings upon retirement, as some are contributing just US$5 per worker.
Some pensioners are receiving as little as US$60 pension payouts despite the cost of living being estimated at least US$500 a month.
With the increase in volatility of official forex rates over the years, pension payouts are increasingly being eroded in value.
The domestic currencies introduced since 2019, the Zimbabwe dollar and now, the Zimbabwe Gold (ZiG), continue to lose value.
“Pension payouts in Zimbabwe, especially those managed by NSSA (National Social Security Authority), are often criticised as being insufficient to sustain a decent standard of living, with some pensioners receiving as little as US$60 per month,” Ipec pensions and life department manager Polite Chidumwa told Standardbusiness in an interview.
The depreciation of Zimbabwe’s domestic currencies is due to the authorities’ reluctance to allow the forex rate to be market-determined as well as a lack of foreign currency or commodity support, market confidence, and substantial economic growth to back them.
“We are saying we have the sponsoring employer who is setting up a pension fund, and when the employer is setting up a pension fund, the employer has an obligation of remitting the contributions to the pension fund, where the contributions are then invested so that the contributions that have been made to the fund, plus the investment returns, will then culminate into the benefit that the member will get,” Chidumwa said.
“So, from the employer’s side, our view is that there is a need for the employer to revisit the amounts to which the employers are contributing so that when these contributions are meaningful, the benefits are also going to be meaningful.
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“But, when these contributions are very insignificant — like the example that I was giving, to say currently if you look at the pension funds that are under our regulations we do have some pension funds where the employer is contributing less than US$5 on a monthly basis.”
He said some pension contributions were so low that even if someone worked for over years they would not have made enough savings.
“It is going to be completely different from one who is contributing, let us say, US$100 a month.
If you accumulate that over a long period of time then it becomes a meaningful pension,” Chidumwa said.
“So that is one of the key issues that we need to look at to ensure that there are meaningful contributions that are coming to the fund.”
He revealed that some employers were paying a very small percentage of a worker’s basic salary and paid more on allowances, as the latter was non-pensionable.
“So, you have a situation whereby one’s contribution is a percentage of the basic salary, with all other allowances not included on that pensionable salary,” Chidumwa added.
“The person is getting a lot today, but when retired, the person is going to get very little.”
The volatility of the ZiG has largely contributed to high inflation even in US dollar terms.
According to the Zimbabwe National Statistics Agency, US dollar inflation hit 15,1% year-on-year last month, meaning goods and services priced in US dollars surged by that percentage between February 2024 and February 2025.
