By Centre News Reporter
The insurance and Pensions Commission (IPEC) is under fire from the Zimbabwe Construction and Allied Trades Workers Union (ZCATWU) over the proposed fitness and probity standards for trustees which automatically excludes trade union officials from pension fund trusteeship.
IPEC contends that union officials must be excluded from the trusteeship of pension funds because they are conflicted parties.
However, the section classifies trade union representatives as conflicted parties. It states that:- (c) Is a trade union representative.
This is due to the fact that the trade union representative’s role is focused on active members of the pension scheme, who are only one class of beneficiary. This bias may result in conflicted decisions.
In a statement, ZCATWU general secretary, Nicholas Mazarura said section 4.2c of the proposed standards which seeks to eliminate trade union officials from the trusteeship, is discriminatory and is likely to expose funds to abuse by IPEC.
Mazarura has demanded that IPEC scraps section 4.2c of the Fitness and Probity Standard for Trustees if pension funds are to serve their founding purposes and sustainably benefit beneficiaries.
“ZCATWU notes that the section is discriminatory and was ill-thought as it seeks to elbow out workers’ representatives for selfish reasons.
It must be noted that trade unions played a pivotal role in the formation of sectoral pension funds and it is overzealous for IPEC to classify unionists as ‘conflicted’ in running their own creations,” Mazarura said.
He further blasted IPEC for failing to promote the foundational principles of pension funds which are to champion the welfare of workers after their working time.
Mazarura went on to say that the “discriminatory” clause was meant to promote capitalistic tendencies ahead of founding values, particularly the pension funds sector. He said while ZCATWU was not opposed to the regulation of pension funds, the operating standards needed to be rationalised for a win-win outcome. “We are against disruptive interference in the form IPEC’s discriminatory prescriptions. It is our view that in the absence of trade union representatives, pension funds would be abused to the detriment of beneficiaries.
“Pension funds would be forced to invest in non-performing prescribed assets which do not directly benefit beneficiaries.”
He added that the pensions commission was failing to appreciate the role of trade unions in the management of pension funds while creating a scenario that would leave beneficiaries worse off.
“ZCATWU believes that the proposed new measures lack depth on the structural functions and role of pension funds. IPEC has not consulted widely, its proposals are narrow and do not have direct benefits for beneficiaries.
“Sectoral Pension Funds are a creature of collective bargaining by employer and employee parties to advance their interests and welfare. For example, the Construction Industry Pension Fund was established following the promulgation of Statutory Instrument 239 of 1992, and registered in terms of section 79 of the Labour Relations Act [Chapter 28:01]. SPF’s were created by workers to cater for their welfare upon retirement. They are different from voluntary Private Pension Funds. It therefore defies logic to classify trade union representatives as conflicted in SPF’s,” he said.
Mazarura further alleged that IPEC was misguided in believing that trade unions only represent the interests of active members.
“Unions draw membership and represent a broad section of society from students to pensioners. Trade unionists have always agitated for the interest of workers but IPEC now seeks to reverse that. It is only the current active member who has the potential to make the best investment decisions as they stand to benefit from the same decisions. Our best interests are safeguarded by our own who are trade union representatives, he said.
He lamented that the new regulation was being enacted at a time when most pension funds were struggling to improve on their benefits adding that unions had the solution to salvage the situation.
“This area needs critical contribution of the trade union representative mandated and deployed by the union membership for guardianship of their future. IPEC is blind to the fact that parties to National Employment Councils are critical in determining the percentage contributions and can salvage struggling pension funds through collective bargaining.
Mazarura went on to say that while section 7.2 recognises other classes of beneficiaries it is silent on the major stakeholder, a future beneficiary which is the trade union member, particularly for compulsory Sectoral Pension Funds (SPF).
Section 4.2c which discriminates against trade unionists clearly contradicts with section 7.2. which states that; “To maintain the trust that members of the pension fund place in them, effective trustees deal with all fund members and beneficiaries in a fair and objective manner. Effective trustees do not give preferential treatment to beneficiaries within a particular class of members or otherwise favour one class over the other. Many funds have different types of participants: active members who are making contributions and accruing benefits, deferred members who have left employment but have not transferred their assets and will draw future benefits when reaching retirement age, and retirees, including beneficiaries of deceased members, who are currently drawing retirement benefits. Effective trustees balance the interests of all types of members, treating each class of members fairly and ensuring that benefits and accumulation adjustments are done in a fair and transparent manner”.