Registrar's Circulars: 2002
The office of the Registrar of Pension and Provident Funds issued the following circulars in 2002:
No 1 of 2002 dated 3 January 2002: this stipulates that the maximum increase to pensions for the year 2002 is 100%.
Comment: This is the highest regular annual increase to pensions ever permitted. However, it merely reflects the current high level of inflation (the increase in the CPI over the 12 months ending December 2001 was 112%).
No 2 of 2002 dated 2 January 2002: this increases the maximum pension for full commutation from the current $1,000 per month to $2,500 per month with effect from 1 January 2002.
Comment: This is another adjustment to make allowance for the current high levels of inflation. All funds with pensions in payment which are smaller than $2,500 per month should consider making an offer to those pensioners to commute their pensions in full. We would be pleased to assist in calculating those values. This increase was formally gazetted as the Pension and Provident Funds (Amendment) Regulations, 2002 (No. 6) on the 8th February, 2002.
No 3 of 2002 dated 21 January 2002: this sets out how pension funds should handle free shares acquired through demutualisation.
To summarise the contents of the Circular:
- The Circular notes that the Trustees of some pension funds are contemplating passing the shares or the cash obtained by selling the shares directly to the members;
- The Registrar's view is that the shares are assets of the Fund and should be treated like any other asset of the Fund;
- The Board of Trustees in consultation with the employer determines how the additional value created by the shares is to be utilised - for example to reduce employer contributions or improve benefits;
- In making this decision, the Board must make sure that the Rules of the Fund permit them to do this;
- Thus, no active member of a Fund may receive the proceeds of the free shares while he/she remains employed by the employer; such benefits will only become payable when the employment is broken through death, withdrawal or retirement;
- In the case of pensioners, their benefits can be enhanced by either increasing pensions or through the payment of a lump sum or a combination of the two.
Comment: This is a somewhat belated, but helpful, official statement on a particular problem which arose on the demutualisation of Old Mutual. Even today, the problem still persists and it is to be hoped that this will assist in clarifying the situation to the members.
No 4 of 2002 (undated, but first seen by us on 28th August 2002)
Headed, RE: AGRO-INDUSTRY BONDS ZW$30 BILLION: PRESCRIBED ASSET STATUS, this read as follows:
"In view of the land reform program, Government will be issuing Bonds with a Prescribed Asset status in the near future to finance the ongoing agrarian reforms. 50% will be earmarked for on lending to the new farmers to finance agricultural inputs and 50% will be for infrastructural development.
Your urgent attention to support the ongoing agrarian reform program will be most appreciated."