The New Currency And The Pensions Industry In Zimbabwe: Currency Conversion and Compensation Framework For Lost Pension Values

On Friday the 5th of April 2024, the President of Zimbabwe, through Statutory Instrument 60 of 2024 Presidential Powers (Temporary Measures) (Zimbabwe Gold Notes and Coins) Regulations 2024, passed into law a new currency law. The new currency introduced is known as the ZiG and it replaces the Zimbabwean Dollars. The changes brought about by the new currency require that pension funds, pensioners, boards of trustees, principal officers and fund administrators develop a comprehensive and systematic plan to ensure compliance with the new law which would be consistent with their fiduciary duties.

Currency Legislative provisions

Following the adoption of the multicurrency regime in 2009, Zimbabwe initially reverted to the exclusive use of the Zimbabwean dollar in 2019. This was done through various legislative instruments, particularly the Finance Act No.2 of 2019 and Statutory Instrument (S.I) 212 of 2019[3]. Subsequently following Statutory Instrument  85 of 2020[4], any person could now use free funds for the purchase of goods and services in Zimbabwe. These regulations have had the effect of allowing transactions in foreign currency and Zimbabwean dollars. It is thus pertinent to note that pensions policies can either be lawfully denominated in local currency or foreign currency, thus benefits or claims arising from pensions contracts will be settled in the currency in which premiums would have been received[5].

New currency provisions Statutory Instrument 60 of 2024

On Friday the 5th of April 2024, through Statutory Instrument 60 of 2024 Presidential Powers (Temporary Measures) (Zimbabwe Gold Notes and Coins) Regulations 2024 (hereinafter referred to as the Regulations), passed into law a new currency law. The new currency introduced is known as the ZiG (means the Zimbabwe Gold notes and coins) replaces the Zimbabwean Dollars.

ZiG to be unit of account for transactions previously denominated in Zimbabwe dollars.


For accounting and other purposes (including the discharge of financial or contractual obligations), all assets and liabilities that were, immediately before the effective date, valued and expressed in Zimbabwe dollars, shall be deemed to be values in ZiG at rate as converted in terms of section 6(1).

Value of the ZiG on date of Issuance[6]


The regulations state states that on the date of issuance of the ZiG by the Reserve Bank, the value of one ZiG shall be the value of one milligram of gold of ninety-nine per centum purity as determined by the spot price of gold and the prevailing interbank foreign exchange rate. Thereafter it shall be determined by the inflation differential between ZiG and the United States Dollars inflation rates and the movement in the price market of the precious metals (mainly gold) and valuable minerals in the reserves held by the Reserve Bank of Zimbabwe.

Conversion of ZWL$ to ZiG

The Regulations in section 6 provides for the conversion of existing ZWL$ balances into ZiG balances. It states that on the day of issuance of ZiG all Zimbabwean Dollar balances held in any account by a bank shall be converted to ZiG balances by dividing the Zimbabwean dollar balance with the ZiG rate on the day. This formular for conversion is stipulated at section 2 (7).

The Zimbabwean Dollars in circulation from the date of promulgation of the regulations shall be convertible to ZiG within 21 days (swap window) from that date at the bank using the rate contained in the Regulations. After the 21 days, the Zimbabwean Dollars will not be swapped at the bank (section 6 (2).




The introduction of the new currency presents yet another challenging milestone in which pension industry has to analayse and to consider its effect. Of paramount importance is to understand the provisions of section 48 of the Pension and Provident Funds Act [Chapter 24:32] and determine whether the adoption of the ZiG currency amounts to currency conversion. The provisions of section 48 are set out as below:


48 Currency conversion

(1) In this section—

“Currency conversion date”, means—

(a) the first currency conversion date, being the 1st of February 2009,

when Zimbabwean dollars were suspended as legal tender by United

States dollar; or

(b) any subsequent date notified by the Minister in the Gazette as the

date on which any currency which has been legal tender in Zimbabwe.

is superseded by any other currency; (emphasis mine)

“New currency”, in relation to—

(a) the first currency conversion date notified in terms of paragraph (b)

of the definition of “currency conversion date”, means United States


(b) any subsequent currency conversion date notified in terms of

paragraph (b) of the definition of “currency conversion date”, means.

the currency which supersedes the former currency as legal tender

in Zimbabwe. (emphasis mine)

In my reading of the above provisions of the Act together with the new currency regulations, by operation of law, there has been a currency conversion. The Zimbabwean Dollar has now been superseded by the ZiG being the new legal tender. The importance of this is that the Act prescribes that certain action must be undertaken as soon as possible by the Board of Trustees (for a DB and a DC fund) of a pension fund as shown below[7];

(2) The board of every existing fund that is a defined benefit category fund

shall, as soon as possible after a currency conversion date—

(a) cause the fund’s actuary to calculate—

(i) the fund’s liabilities in the former currency towards its members,

beneficiaries and other stakeholders at the currency conversion date,

taking account of—…

(b) cause the fund’s actuary to apportion the fair value of the fund’s assets

in the new currency between the members, beneficiaries and other

stakeholder so as to establish, so far possible, the fund’s liability in the

new currency to each of those classes of persons.

(3) The board of every existing fund that is a defined contribution category

fund shall, as soon as possible after a currency conversion date, cause a valuator or

other suitable person approved by the Commission to establish—

(a) the value in the former and the new currency of the accumulated

contributions from members and employers, with interest, up to that

currency conversion date; and

(b) the fair value of the fund’s assets in the former and the new currency at

that currency conversion date: and to apportion the fair value of the assets in new currency on an equitable basis between the members, beneficiaries and other stakeholders, taking account of the effects of inflation and other factors as may be necessary.

Section 14 Communication with stakeholders

The Pension and Provident Funds Act advances the principle of treating customers fairly as an important pillar of financial soundness and advocates for the protection of rights of policyholders and pensioners. The Act in section provides for stakeholders whose pension funds are obliged to engage on all issues affecting their rights; “stakeholder”, in relation to a fund, means anyone who has interest in the affairs of the fund; Section 14, subsection 4 provides below.

(4) In addition to any other meetings it is required to convene, the board of the

Fund shall be obliged to convene a meeting prior to—

(a) changing an administrator.

(b) conversion from one currency to the other.

(d) any other change that significantly affects the rights of members. (emphasis mine)

Following the adoption of a new currency all pensions’ funds are obliged to convene a meeting with all its stakeholders as soon as possible to explain the effect of the new changes on their contractual relationship.



Following the recommendations of the Justice Smith report, Statutory Instrument 162 of 2023 (Compensation for Loss of Pre-2009 Value of Pension Benefits Regulations) was gazzetted in September of 2023. These regulations set up a framework for compensation of pensioners who were prejudiced by the loss of value in the hyperinflationary environment. The Insurance & Pensions Commission being the regulator gave all funds a timeline for the implementation of the compensation framework. Following the deadline for compensation frameworks being 31 December of 2023  (all schedules approved in ZWL$) and thereafter the adoption of the new currency, it follows that all compensation frameworks will need to be revisited and revised.

The Pensions Industry has an unenviable task of maintaining value in funds for clients in an everchanging regulatory environment. Pension Funds should have appropriate monitoring and contingency plans in place and to be alive to the evolving risk. The Trustees of all pension funds should work closely with their service providers, administrators, employers and IPEC to ensure that their pension funds continue to be administered on a timely basis. The inadequacies in the administration of these funds ultimately prejudice the pensioner as the failure to mitigate against loss cause by inflation and abrupt currency changes result in loss of pension benefits.

[1] OECD, (2006) Guidelines for Pension Fund Asset Management.

[2] An investigation into pension funds survival strategies during hyperinflation and how they adjusted to a multi-currency regime (2009-2012) Cheers Chikomwe

[3] Also, Statutory Instrument 33 and 142 of 2019.

[4] In terms of section 6 of S.I 85 (payment of goods and services using free funds)

[5] Statutory instrument 280 of 2020 allows insurance and pensions business to operate in foreign currency.

[6] Section 2 (5) of Regulations

[7] Section 48



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