Martin Tarusenga
The report highlighted on some websites that Insurance and Pensions Commission (IPEC) introduced new actuarial standards, raises a few pertinent unanswered questions on IPEC operational strategies.
In particular the report insinuation that the new actuarial standards were introduced on the strength that IPEC made “ . . . several engagements with the Actuarial Society of Zimbabwe (ASZ) regarding . . . ” the valuation reports, takes for granted that ASZ is adequately credible to provide sound independent professional advice pertaining to actuarial standards, to IPEC and to Government overall.
Sound (independent) professional advice is non-partisan advice based on established principles and practices of the particular profession or discipline, and deriving from accurate data/information about the peculiar circumstances/situation being consulted on.
IPEC’s motivation in introducing these “actuarial standards”, and hence the need to consult ASZ are not categorically stated. It can, however, be guessed that it was a hurried reaction to the dispute by pensioners and other subscribers to pension and insurance services, about pension benefit calculations done by actuaries.
As this paper has reported in the past, this contest revealed potentially serious weaknesses in actuarial service provision in Zimbabwe, and fundamentally flawed relationships between actuarial service providers and receivers of these services (IPEC and insurance companies included).
In the wake of these revelations, there is no question that pensioners cannot trust actuarial services, IPEC, and insurance companies, in their current form and structure.
It made sense therefore for IPEC to buttress a badly damaged reputation by lending some credibility both to itself as regulator, and to the ASZ, supposedly experts on pensions and insurance matters in Zimbabwe.
To be sure the actuarial standard essentially confers that unfettered prerogative to define what constitutes “salient features” of an actuarial report, and hence what constitutes a correct pension benefit calculation, to the same actuary that is being publicly indicted for having got pension benefit calculations wrong.
A Government Commission of Inquiry is pending in the latter regard.
The standard is being introduced in circumstances where these “salient features” are not comprehensively and explicitly provided for anywhere, such as to make it mandatory for the actuaries to consider them as a checklist of those issues that have to be incorporated in an actuarial valuation report.
The standard is further being introduced in circumstances where it is not statutorily provided for who has the responsibility of checking whether or not the “salient features” have even been covered, and what their skills set should be.
The IPEC introduced standard places total trust in the actuary and hence ASZ, to highlight the “salient features”, and in correctly incorporating the “salient feature”.
To give the benefit of the doubt to ASZ and its faithful client IPEC, it should be asked who exactly is ASZ? A website report by Abedinigo Sibanda reports ASZ as having been launched in October 1997. Apart from individuals profiling themselves as members of the ASZ, it has no website detailing information about its address, its strategic objectives, its strategy for actuarial development in Zimbabwe and its achievements given that it was launched 18 years ago.
There are no ASZ public announcement about its involvement in the set up of the IPEC set actuarial standards, providing its rationale for so advising IPEC this way, and justifying the effectiveness of this standard.
It is noted here that it demonstrates a void in sense of purpose for an organisation advising a regulatory authority such as IPEC and Government overall to run without a website – in this day and age of (cheap) technology.
A website (<http://saaxgroup.org/blog/2013 /11 /08/actuarial-society-of-zimbabwe-calls-for-new-members>), however lists David Mureriwa, Tawanda Chituku and Sandra Makoni as President, Secretary and Coordinator of the ASZ, respectively.
A disturbing observation on the web is that actuarial services in Zimbabwe are typically provided through actuarial firms that are subsidiaries of insurance company holdings.
In this latter regard, African Actuarial Consultants, Zimbabwe Actuarial Consultancy and Atchison Actuaries are subsidiaries of First Mutual Holding (formerly Afre), Zimre Group of Companies and Comarton, respectively.
Actuarial personnel in these subsidiaries have their salaries and other benefits guaranteed by these insurance and pensions service providers.
The independence of the actuarial services that they provide is by any measure compromised by the demands of their employers.
The actuarial services provided therefore serve to rubber stamp their employers requirements, thus only serving to darn pension and insurance services as having been certified by actuaries.
If the ASZ office bearers as highlighted above are employees of such subsidiary actuarial firms, their advice to IPEC can only serve the interests of their insurance company employers.
Considering that the latter insurance companies, banded together with their subsidiary actuarial firms, the employee ASZ members, and IPEC are already at loggerheads with the public on the issue of rights from pension and insurance contracts, ASZ cannot stand as a credible professional organisation on which IPEC can honestly rely on.
This ASZ apparent state of affairs casts doubt on whether this organisation actually holds meetings in accordance with established practices of good corporate governance, backed by signed minutes.
In this regard it would be interesting to have sight of minutes of its meetings to check its deliberations – in particular minutes of the meeting(s) on how IPEC actually engaged ASZ, whether there were any ASZ submitted professional papers, serving as input into IPEC’s final decision on these actuarial standards.
In this latter regard there are no known professional papers by ASZ or its members serving to advance the local actuarial profession, as would be typical with such professional bodies.
The finance minister must intervene to ensure that IPEC has the capacity to evaluate actuarial advice, that it is guided by watertight pension and insurance legislation, and that it operates on advice founded on solid research.
Intervention via appropriate deliberate Government policies can curb misleading actuarial service provision.
Accountability policies precluding errant, incompetent actuaries and partisan actuarial advice must certainly be in place, together with appropriate incentives for the competent ones.
The Government policies and incentives must lure visionaries, demonstrably sincere to the public interest in pension and insurance services in Zimbabwe.
Various sound actuarial inputs, triggered by this stand-off are already being put forward to enable this actuarial development in Zimbabwe.
These include researched papers, development of requisite data repositories, among other activities.
Martin Tarusenga is General Manager of Zimbabwe Pensions & Insurance Rights, email, martin@zimpirt.com <mailto:martin@zimpirt.com>; telephone; +263 (0)4 883057; Mobile; +263 (0)772 889 716. Opinions expressed herein are those of the author and do not represent those of the organisations that the author represent