To All Member Local Authorities
PENSIONS LEGISLATION CHANGES-REMITTANCE OF CONTRIBUTIONS
1. BACKGROUND LEGISLATION CHANGES
The fund received acircular from the Zimbabwe Association of Pension
Funds(ZAPF) in January 2007 advising its pension fund members of regulatory
changes which were published in Statutory Instrument 243(SI 243) of 2006 on 10
November 2006. Based on the legislative changes contained in Statutory
Instrument 243 of 2006 the following provisions were changed:-
1.1. Reduction In Cut Of Period on Remittance of Contributions
According to item 7 of SI 243 of 2006, Employers are now required to remit all
pension contributions (including additional voluntary contributions) within
fourteen days (previously 21 days) from the end of the calendar month in respect
of which the contributions are payable.
1.2. Additional Voluntary Contributions (AVC's)
A member can now make additional voluntary contributions (AVC's) up to any
amount as the maximum deduction of 10% of pensionable salary has been removed.
1.3. Benefit Payments
Item 9 of SI 243 of 2006 states that a pension fund should pay benefits
within a maximum period of sixty days from
the date of exit (termination date). The foregoing provision covers payment of
retirement, retrenchment , withdrawal, death-in-service,death after retirement
beneifits and full commutation of pensions.
With regards to the payment of periodic benefits such as monthly pensions in
respect of pensioners and beneficiaries, a pension fund should pay the benefits
within a maximum period of fourteen days
from the last day of the period in respect of which the benefit is payable.
2.PENALTIES FOR NON-COMPLIANCE
2.1. In the event that the employer fails to remit the pension contributions
(including AVC's) within the stipulated time period, the outstanding
contributions should be paid together with interest not exceeding the Reserve
Bank Of Zimbabwe (RBZ) unsecured ongoing rate
(currently 1,5% p.a. simple interest effective 1 August 2009).
2.2 Should the fund fail to pay benefits to exiting members within
sixty days from date of exit and periodic
benefits within fourteen days from date of
entitlement, pension legislation now requires the Fund to pay the benefits
together with interest not exceeding the Reserve Bank Of Zimbabwe unsecured
ongoing rate from date of exit up to date of payment
2.3. According to Item 18 of SI 243 of 2006, failure to comply with the above
pension regulations by the Employer or Fund shall atract a penalty. Any
persistence in non compliance after the initial maximum period of sixty days
shall attrat a fine not exceeding level six or imprisonment for one year or both
such fine or imprisonment.
3.At its meeting held on 12 february 2007, the Fund's Management Committee
resolved that the late payment interest on benefit payments or periodic benefits
should be equal to the Fund's latest audited investment return and applied on a
compund interest basis. In addition, cognizant of the need for member Local
Authorities to play their par in timeously submitting official documentation so
that the Fund can meet processing deadlines, the Management Committee resolved
that member Local Authorities should submit benefit clai forms with complete
supporting documentation within seven workind days of the member's date of
exit.If the member Local Authority fails to submmit the benefit claim forms
within seven working days, resulting in the Fund failing to process the claim
within the regulated sixty days, the specific member Local Authority would be
required to settle the late payment interest.