How Inflation and Exchange Rates Affect Arrear Contributions

In Zimbabwe’s volatile economy, delayed pension contributions (called arrears) can lose real value fast. Why? Because inflation and exchange rate shifts act like silent thieves—stealing the worth of those payments before they even reach your retirement pot.

Late Contributions + Inflation = Big Losses

When contributions are paid late, rising prices and weakening currency reduce their buying power. Imagine someone owed ZWG 10,000 on 26 September 2024—it was worth USD 714 then. Just one day later, the same amount was worth only USD 410 due to a currency slide. That’s nearly half—gone overnight.

ZEIPF has faced this challenge too:

USD 60.24 million lost in 2019 after regulatory conversion under S.I. 33 of 2019.
USD 16.85 million lost over the past two years due to inflation and exchange rate erosion.
USD 15.26 million in arrears still unpaid in USD terms.

Double Trouble: Inflation + Low Investment Returns

High inflation doesn’t just hurt delayed payments. It also makes investments less profitable. That means the Fund earns less, and your retirement value grows slower than it should. It’s a double whammy: your owed contributions are worth less, and the real return earned on investments held is strained.

How ZEIPF is Fighting Back

ZEIPF is actively working to preserve your hard-earned pension value through:

USD Indexing of Arrears: The Fund’s Board is engaging the ZESA Holdings Board to finalise the proposed indexing of contribution arrears to the USD for value preservation. Final approval from ZESA Holdings is pending.
Escalation to IPEC: Delayed contribution payments are reported to IPEC every month, and the Board has requested IPEC to exercise its legal powers to garnish the sponsoring employer’s accounts.
Smart Investments: The Fund follows a strict investment policy focused on inflation-proof assets like property and offshore portfolios.

How ZESA Staff Pension Fund is Fighting Back

The Board of the ZESA Staff Pension Fund is actively working to preserve Fund value through:

USD Indexing of Actuarial Deficit: The Fund’s Board is engaging the ZESA Holdings Board to finalise the proposed indexing of the actuarial deficit to the USD for value preservation. Final approval from ZESA Holdings is pending.
Escalation to IPEC: The impact of value loss on the actuarial deficit was reported to IPEC, and the Board is appraising the Commission on progress made to date.
Smart Investments: The Fund follows a strict investment policy focused on maximising returns on available property investments and strict cashflow management.