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MPs: Harmonise pension computation

6th November 2013
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Saada Mkuya Salum, Deputy Finance Minister

Members of Parliament yesterday faulted the government for failure to harmonise pension payment of terminal benefits to members of its various social security schemes, saying the irregularities discourage membership to the schemes.

Debating the Government Employees Pension Fund’s (GEPF) Retirement Benefits Fund Act, 2013 tabled yesterday by Deputy Finance Minister Saada Mkuya Salum on behalf of the Finance Minister, Dr William Mgimwa, the lawmakers said there was no reason for the government to fail to harmonise the formula.

“We cannot have sustainable economic development without strengthening our social security schemes,” said David Kafulila MP (Kigoma-South, (NCCR- Mageuzi).
The legislator added: “…of 45million people in the country, only 2.6 million people are registered members of either of the schemes.”

Further debating the matter, Peter Serukamba MP (Kigoma-Urban, CCM) supported the call to harmonise the formula saying the move is crucial if the beneficiaries are to understand the benefits.

In addition, Serukamba suggested that as the government shifts its Funds from Provident Funds to Pension Funds, the social security schemes should incorporate providence funds provisions so that people in the informal sector can join.

“It’s good that the government harmonised the legal and regulatory framework of the GEPF, however, it still needs to harmonise the pension formula,” he advised.
Earlier, tabling the GEPF Retirement Benefits Fund Act, 2013, Deputy Finance Minister Saada Mkuya said the Act seeks to amend legislation in the scheme’s section 51 of 1942.

The Act is also meant to make the scheme manageable in accordance with social security laws (amendments) Act, 2012 that established the Social Security Regulatory Authority (SSRA). It is also aimed at abolishing eight laws mentioned in the Act which contradict the execution of the Act.

“The Act proposes the establishment of the scheme’s Board of Directors and setup procedures for evaluating the fund and actions to be taken should the employers stop contributing,” she explained.Special Seats MP for Chama cha Demokrasia na Maendeleo (Chadema) from Karatu, Cecilia Paresso, announcing official opposition proposal on the GEPF Retirement Benefits Fund Act, 2013 expressed dismay on the specification of withdrawal benefits provided by pension funds.

She said the government has to make it clear, that even with the GEPF Act it should clearly define possibility of its members to withdraw at their specific time.

In 2011 the government said, once the formula is harmonised, it would be used by social security funds throughout Tanzania.

At a stakeholders meeting, the Permanent Secretary explained that the harmonisation plan would be impossible to implement without first amending the laws under which the individual social security funds were set up.

Social Security Regulatory Authority (SSRA) Director General Irene Isaka was quoted saying they are working to come up with a harmonized benefit structure.

She said the structures would be inclusive of the pension computation formula aimed at improving members’ benefits and increasing the sustainability of the social security schemes.

Tanzania has six major funds, PPF, GEPF, National Social Security Fund, Local Authority Pensions Fund and Public Service Pension Fund.

The biggest challenge facing the schemes includes the different formulas they use in computing their member’s benefits although the contribution rate is the same. They also lack indexation, a transferability mechanism and uniform investment guidelines. 

SOURCE: THE GUARDIAN