Tughe strongly urges for review of retirement benefit formula

What you need to know:

The trade union says it was never consulted when the ministry was drafting the new regulations

They want the government to review the regulations to improve retirees benefits because the new formula doesn’t work in their best interests

Dodoma. The Tanzania Union of Government and Health Employees (Tughe) has strongly urged the government to review the formula of calculating retirement benefits, which was made public recently.

Tughe’s statement comes hardly a day after the Tanzania Local Government Workers Union (Talgwu) made a similar call.

Under the new formula, a retiree would receive 25 per cent of his/her savings after retirement, while the remaining 75 per cent would be paid in instalments spread out in a period of 12.5 years.

Previously pensioners, save those from the National Social Security Fund (NSSF), received 50 per cent of their savings in a lump sum, while the remaining amount was paid in installment.

However, Tughe vice chair Magreth Kajuju said there was the need for the government through the responsible ministry to review the formula.

According to her, Tughe was involved in the process to enact the law, which merged pension funds but they were never consulted at the time the ministry was drafting the regulations.

“Since the new regulations involve pensioners they should be consulted through their trade unions. It is unfair for the government to enact such regulations, which in our opinion they are oppressive,” said Ms Kajuju.

For his part, Tughe Secretary General Hery Mkunda suggested that it was time for the government to get back to the negotiating table and discuss the matter.

Citing an example, he said a retiree, who was paid a salary of Sh1 million was supposed to be paid a lump sum of Sh62 million as a gratuity and a pension of Sh8 million, but in the new formula he/she would be paid a lump sum of Sh23.3 million and a gratuity of Sh6.2 million.