Dar es Salaam. The row over the so-called withdrawal benefit is
back—and this time the government is set to clash with trade unions over
new regulations that impose an 18 per cent cut for workers who opt to
withdraw before their retirement age.
Under the new scheme of things, all social
security agencies will use one formula to compute pension benefits. But
the Trade Union Congress of Tanzania (Tucta) has criticised it on the
grounds that the formula disadvantages some retirees, who will receive
reduced pensions.
But the regulator, the Social Security Regulatory
Agency (SSRA), has played down Tucta’s argument that the new regulation
is unconstitutional. SSRA maintains that as long as they have been
approved, the new regulations will be implemented fully.
Besides introducing the new pension calculation
formula, the pension benefits harmonisation rules of 2014 also stipulate
that a worker who retires at 55 will lose 18 per cent of the pension.
All new members who joined the scheme from last
July will be managed under the new benefits formula, according to SSRA,
but this applies only to members from LAPF and PSPF. For members of
other social security funds—PPF, NSSF and GEPF—the new regulations will
apply regardless of when they joined. The mandatory retirement age is
60, but there is room for employees to retire at 55.
Speaking exclusively to The Citizen yesterday in
Dar es Salaam, the SSRA director of research, actuarial and policy
development, Mr Ansgar Mushi, accused trade union leaders of misleading
the public. He added: “We involved trade union leaders in the process of
making these regulations. We have evidence of that and it is strange
that they are saying something different. I wonder why they didn’t air
their grievances during the process.”
The new benefit formula is intended to boost the benefits of members and to keep the social security system sustainable.
In issuing the new regulations, SSRA has been
empowered by Section 6, 25 and 36 of the Social Security (Regulatory
Authority) Act, No. 8 of 2008. Section 6 (1&2) of the regulations
stipulate that the age of voluntary retirement shall be 55. It goes
further to say that a member who attains the age of 55 years may at any
time opt to retire. If he does not do so, he will continue to be a
member until the age of 60.
But Tucta President Gratian Mukoba has rejected
the new regulation on terminal benefits calculations on the grounds that
it is unconstitutional and reduces pension benefits by 50 per cent.
If adopted, Mr Mukoba said, the proposed formula
would cut public servant pensions by half, marking a significant change
from the current legislation, where teachers receive generous payments
from pension funds.
Under the new benefits harmonisation rule, the
SSRA proposed a terminal benefit formula that works out this way: (1/580
times average salary of three years, times total months in office,
times 12.5 (projected years after retirement) to get one’s pension.
Under this formula, members of the six major pension schemes will
receive a lumpsum of 25 per cent.
“Following the government’s recommendation, the
lumpsum payments will be reduced by 50 per cent…the recommendations will
increase monthly payments,” Mr Mukoba is on record saying.
- The Citizen
- The Citizen
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