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Zimbabwean pensioners paid below poverty line

Published Mar 25, 2011

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Zimbabwean pensioners who hold policies at Old Mutual Zimbabwe (OMZ) are being paid out as little as US$20 (R138) a month – less than the universal poverty datum line of $1 a day – as a result of years of economic meltdown and proscription of the holding of foreign investments.

Local investment houses – including First Mutual (previously Colonial Mutual), Intermarket (previously Southampton), the National Railways Pension Fund, the Postal Workers Pension Fund and the Anglo American Pension Fund – have been barred from holding assets abroad since Rhodesia days.

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But the Zimbabwean arm of the London-listed pension and life assurance company says things are looking up. It has lobbied Zimbabwean Finance Minister Tendai Biti to allow foreign holdings. OMZ is seeking a 25 percent foreign asset holding to diversify its holdings and spread its risk for clients. Biti, who is from the MDC-Tsvangirai wing of the unity government with Zanu-PF, is expected to make an announcement soon.

Also assisting the investment climate for OMZ is that the state-prescribed asset ratio had dropped from a peak of 60 percent to 10 percent. This is required to be held in government and municipal bonds and the state debt market, all of which performed badly during the past 12 years.

The reduced prescription had allowed OMZ to diversify and expand its holdings in the private sector – but until now only within the country, OMZ chief executive Luke Ngwerume explained.

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He said OMZ was servicing 200 000 pensions, of which 80 000 were receiving pensions “of between $20 to $2 000 dollars a month”.

OMZ had, however, made it through the meltdown. Ngwerume said OMZ still had about $1 billion of investments in the domestic market, but Old Mutual South Africa director of corporate affairs Crispen Sonn acknowledged that in many cases returns for pension policy holders in Zimbabwe had “actually been negative”.

Investments had been concentrated – albeit limited until recently to a 40 percent share – in property holdings, factories, shopping complexes and business premises. These had performed reasonably even though people had clung on to fixed assets during the currency crisis.

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Following a stinging attack by exiled Zimbabwean politician Roy Bennett – who strongly criticised OMZ’s involvement of an 18 percent share in the pro-Zanu-PF Zimpapers, which include the Harare Herald – Ngwerume said the Zimpapers investment dated back “to the pre-independence” era.

“Zimpapers is the only substantial print and media asset available to policy holders in terms of exposure to that sector,” he said.

It was known that OMZ – aware of the partisanship of the papers – had wanted to “sell down” this asset for some time, but the company had not yet identified a buyer.

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While Ngwerume did not want to get into the nitty gritty of this investment, he did say that this shareholding in Zimpapers of 18 percent was held in trust “on behalf of our Zimbabwean customers (policyholders) and therefore is a portfolio investment and not a shareholder investment”. - Business Report

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