Parliamentary Committee urges govt to pay its debts, arrears to pension funds

Dar es Salaam. The Parliamentary Social Welfare and Community Development Committee has directed the government to prepare implementable plans for servicing debts owed to social security funds.

The debts included those advanced to the central government for the implementation of development projects as well as unpaid workers’ contributions to the Public Service Social Security Fund (PSSSF).

To rescue the social security funds, the committee has directed the government to prepare implementable debt-repaying plans.

The committee issued the directives on Wednesday, February 7, 2024, when tabling its report on the implementation of its duties for 2023.

The committee chairperson, Ms Fatma Toufiq, Special Seats, CCM, said retirees face the challenge of improper and untimely disbursement of benefits due to funds’ cash flow problems.

“The challenge arises from a combination of accumulated contribution arrears from certain employees and longstanding debts owed by the government to security funds. Consequently, this impedes the organisation's efficient execution of its duties,” she told the august House.

She urged the National Social Security Fund (NSSF) to implement stringent legal measures against dishonest employers who submit contributions lower than the actual salaries of their workers, fail to provide employees with employment contracts, and register fewer workers than the actual number employed.

“NSSF should increase its speed in the registration of members and reinstate treatment benefits to members of the informal sector in order to attract new members,” she said.

Ms Toufiq said the ongoing actuarial valuation is expected to determine the resilience and viability of the funds.

“We hope that the assessment will be completed in the near future for the benefit of retirees,” she said.

PSSSF

Last year, the government paid Sh2.17 trillion to PSSSF to service debts that had accumulated for the last 20 years. The remaining debt was Sh2.45 trillion.

PSSSF legal director Vupe Ligate said in September 2023 that the payment included Sh500 billion aimed at servicing a Sh731.4 billion loan that was issued before the 2018 merger of the defunct funds (PSPF, PPF, LAPF, and GEPF) to form PSSSF.

The government used the loans to construct the Parliament building in Dodoma, the Local Government Training Institute (LGTI), the Nelson Mandela Institute of Science and Technology and the University of Dodoma (Udom).

She noted that the servicing has bolstered the pension fund's capacity to provide for beneficiaries, with the number projected to reach 11,000 by the end of the 2023/24 fiscal year.

Regarding the fund’s performance, Ms Ligate said it has managed to protect and increase its value by 27.76 percent, from Sh5.83 trillion recorded in July 2018 to Sh8.07 trillion in June 2023.

“The fund has maintained its investment, and the value of the investment reached Sh7.92 trillion in 2023 as compared to Sh6.40 trillion recorded in 2018,” she said.

NSSF

According to the audit report conducted by the Controller and Auditor General (CAG), government entities and public parastatals have a total debt of Sh1.174 trillion owed to the National Social Security Fund (NSSF).

This debt includes both the principal debt and accrued interest, covering the period between 2008 and 2022.