Trade unions defend JPM decision pension formula

Dar es Salaam. Workers representatives have defended the decision by President John Magufuli to revert to the old pensions payment formula amid an outcry from private sector employees and a section of the public service that feels segregated.

The Trade Union Congress of Tanzania (Tucta) allayed widespread fears among pensions funds members and their lobbyists, assuring them that the outstanding issues would be resolved within the period the President prescribed at a crunch State House meeting with workers’ representatives yesterday.

Tucta secretary general Yahya Msigwa said President Magufuli, who called the trade union leaders to present their case during the meeting, had left “room for dialogue”.

“I don’t think there is any need for panic because everything will be sorted,” said Dr Msigwa. “As much as we want huge chunks of pensions upon retiring, we should also consider the sustainability of the funds.”

Public sector workers were the biggest winners from the directive for pensions funds to revert to the old formula that grants retirees a once-off 50 per cent payout of their total benefits, instead of the 25 per cent stipulated in the controversial new pension regulations, which got the nod from Labour minister Jenister Mhagama in August this year.

The new regulations followed the merger of five public pension schemes into one – Public Service Social Security Fund (PSSSF), which alongside National Social Security Fund will now be the only two working schemes in the country. The NSSF caters for private sector employees.

But the new regulations quickly attracted the wrath of civil servants when it became apparent that they would lose up to three times of the amount that was paid in the past. Some parliamentarians also accused the government of “sneaking” in the regulations a pension payment formula not legally approved.

While civil servants seemed to have won the battle over the pension formula following Friday’s decision by President Magufuli, there are concerns that private sector players have been left in the cold.

Opposition ACT-Wazalendo women’s wing insisted that the private sector has been neglected.

Party women wing deputy secretary general Mwanaisha Mndeme said although the party commends the President for the bold decision it will continue to push for the interests of the private sector.

She argued that the private sector had a major share of contributions and therefore, there was a need for a balancing act.

However, Tanzania Higher Education Trade Union chairman Paul Loisulie dismissed the suggestion that the private sector was left out.

“The President did not segregate private sector employees; instead, he mad a decision that allows for dialogue,” he said. Tucta remained upbeat that the matter would be resolved in the next five years, the transition period that the President had asked for.

The pension row claimed the sculp of Social Social Security Regulatory Authority (SSRA) director general Irene Isaka hours after the President had quashed the new pensions payment formula that she pushed for.

A terse, three-paragraph statement by State House Friday night did not give reason for her removal. But her departure was written on the wall the moment the President made it clear that he would side with the workers in the dispute.

Earlier, Dr Magufuli had challenged the SSRA to enhance its oversight role and ensure pensioners’ money was not embezzled or squandered through suspect investments.

“Dubious projects like the Dege Eco Village implemented by NSSF in Kigamboni Area should not have happened and should have been left to the private sector,” he said of the stalled housing estate valued at over Sh780 billion and now under investigations.