TANZANIA'S PLAN TO MERGE PENSION FUNDS KICKS OFF

Tanzania has started the process of merging its seven social security funds into two schemes, with the aim of boosting service delivery.

Through the draft Public Service Social Security Fund Bill of 2017, the government will repeal previous laws under which the seven funds were established.

The Bill, seen by The EastAfrican, is to be presented before parliament early next year.

It proposes that all public servants be absorbed by the Public Service Social Security Scheme to be formed under the Act.

The Act will also establish the Public Service Pension Scheme that will absorb all government employees, repealing the Public Service Retirement Benefit Act.

Public servants currently belong to the National Social Security Fund (NSSF).

The other existing funds are the PPF Pension Fund, Public Service Pension Fund (PSPF), Local Authorities Pension Fund, Workers Compensation Fund, Government Employees Provident Fund, and the National Health Insurance Fund.

The seven funds have 2.1 million members with total assets of Tsh8.87 trillion ($4.4 billion).

Minister for Parliamentary Affairs, Labour, Employment and Disabled persons Jenista Mhagama said the government has formed a team of experts to come up with a plan that would help to merge the funds.

She told an NSSF stakeholders meeting that the government has started to review the social security policy of 2003 in order to make sure that more people are accommodated in the scheme.

“We want to make amendments that will enable us to see various changes in the social security industry,” said Ms Mhagama.

Worry

But secretary general of the Trade Union Congress of Tanzania Dr Yahya Msigwa said that public service pensioners are worried that the new law will change the current formula used to calculate their monthly pension payments.

Currently, the PSPF has the best monthly payments. Senior retired officers from both the public and private sectors receive Tsh11 million ($5,000) while junior, retired staff get the minimum amount of Tsh100,000 ($50).

Tanzanian pensioners qualify for monthly pension payments after contributing to their respective funds a total of 180 months or 15 years of their working service life.

In a move aimed at helping Tanzania industrialise, the government directed social security funds to shift focus away from real estate to industrial development.

Investments

NSSF alongside the PPF Pensions Fund invested in sugarcane farming and a factory on a 63,000 acre farm in Mkulazi in Morogoro region, some 200 kilometres south-west of Dar es Salaam.

“The goal is to plant 3,000 acres of sugarcane by December. The project has already created some 150 jobs in the area and in nearby villages,” said NSSF director-general Prof Godius Kahyarara.

“Through industrial investments, NSSF hopes to generate profits for its current members and register new members employed in newly established industries and agricultural farms,” said Prof Kahyarara.

The East African