How much does the employer contribute?
The employer is required to contribute a minimum of 7.5% of the contributing employees’ basic salary. There is also a provision for additional voluntary contributions by employers but there is no cap for such a contribution by the employer. Employers are however not obliged to match their employees’ additional voluntary contributions that are higher than the minimum of 7.5%.
Chamber of Mines Pension Enhancement Fund (COMPEF)
COMPEF is a benevolent fund that was set up in 2006 as an initiative of the Chamber of Mines of Zimbabwe in response to the plight of pensioners whose pensions had been severely eroded by hyperinflation. Thus, the formation of COMPEF was an acknowledgement that the pension amounts paid by the Mining Industry Pension Fund were very low and that this was as a result of the economic decline in the country coupled with structural issues. The structural issues were that contributions to the Fund were pegged at 5% apiece while in general other pension funds were based on contribution rates of between 10% and 20%. Thus, the MIPF contributions were the lowest. As the pension quantum is a function of the amount contributed, investment returns earned and the period of contributing to the Fund, it was agreed that some financial intervention was necessary in order to improve pensions of former mine workers. Therefore, through the Chamber of Mines as the employer association, it was felt that all employers in the mining industry needed to support this initiative by contributing an additional 2.2% of their total wage bills towards COMPEF. Members do not contribute to COMPEF. The idea is for all pensioners on the Fund’s books to receive an additional amount from COMPEF, over and above their MIPF monthly pensions. Therefore, an equal amount is paid to all pensioners on book and is derived by dividing the amount to be distributed by the total number of pensioners. The amount varies every month depending on the distributable amount available. The Mining Industry Pension Fund is therefore tasked with the day to day administration of COMPEF while a separate Board of Trustees appointed by the Chamber of Mines of Zimbabwe provides oversight and direction.
The Pension and Provident Funds Regulations provide that the employer should remit current month pension contributions by the 14th of the following month.
The employer is also required to submit contribution schedules that show members’ personal details such as their names, dates of birth, national identification details, gender, member numbers, as well as their financial details such as basic salary, employer contribution amount, employee contribution amount for each employee, and the Chamber of Mines Pension Enhancement (COMPEF) contribution amount. The contributions schedules, together with the proof of payments must be submitted to the Fund not later than 14th of the following month to which they relate.
NB: It is important for employers to note that it is a criminal offense to deduct pension contributions and fail to remit them to the Fund. In order to protect the interest of the members, the Pension legislation requires that pension funds charge interest on all outstanding contributions, at a rate equivalent to the unsecured overdraft lending rate charged by the respective pension fund’s bankers.