Pressure mounts over pension formula

Shadow Minister for Labour, Youth and Employment Ester Bulaya

Dar es Salaam. Pressure is growing on the government to review the formula for calculating retirees benefits.

This time around, Shadow Minister for Labour, Youth and Employment Ester Bulaya (Chadema) says she will table a private motion in Parliament if the government sticks to its guns.

Speaking during a press conference in Dar es Salaam yesterday, Ms Bulaya, who is the Bunda Urban MP, told reporters that the government should either change regulations or revert to the old system.

Under the new formula, which was introduced by the new regulations after merging pension funds, pensioners will henceforth receive 25 per cent of their savings in lump sum while the remaining 75 per cent will be paid on a monthly basis.

Under the old arrangement, members of the Government Employees Pension Fund (GEPF), Local Authority Pension Fund (LAPF) and Public Services Pension Fund (PSPF) were receiving 50 per cent of their retirement benefits in lump sum and the remainder in monthly packages.

Ms Bulaya said: “Despite the fact that the speaker of National Assembly commended the regulations, I will not rest until the government listens to what majority of the people want and, if need be, I will table a private motion in the Parliament.”

Ms Bulaya said the new formula cast a bleak future for pensioners, citing the new regulations and the government’s accumulated Sh8 trillion debt owed to pension funds.

“Chadema is against this bad practice of weakening pension funds at the expense of workers’ rights. Our policy calls for stabilising pension funds so that the rights of workers, including pensioners, are protected,” said Ms Bulaya. For their part, ACT Wazalendo elders council proposed to the government to continue paying retirement benefits using the old formula.

Speaking on behalf of the council, the national secretary, Mr Hamad Tao, said: “A 12-year timeline should be removed so that pensioners continue to receive payments for the rest of their lives.”

The elders also suggested that the right to social security should be for all people working in both formal and informal sectors.

The Higher Education Workers Trade Union (THTU) also raised similar concerns recently.

THTU said the controversy surrounding the pension payment formula should be addressed as a matter of urgency.

The union’s chairman, Dr Paul Lousilie, said in Dodoma that although they supported the merger of social security funds, the relevant regulations should be revisited.

“It is unfortunate that the process of formulating the regulations, on which the contentious formula is based, was not inclusive as it sidelined key stakeholders, including THTU. However, we believe that there is still an opportunity for all relevant stakeholders to be involved in amendment of the regulations,” he said when reading the trade union’s statement.

However, Social Security Regulatory Authority (SSRA) defended the government’s decision to harmonise formula used to calculate retirees’ benefits, insisting that the move intended to bring equality to pensioners.

Through the Public Service Social Security Fund Act, 2018 merged PPF Pension Fund, PSPF, LAPF, GEPF and National Social Security Fund (NSSF) to form PSSSF, which will deal with public servants. NSSF will continue to deal with the private sector.