Tucta for urgent revision of formula on retirement dues

06Dec 2018
The Guardian Reporter
The Guardian
Tucta for urgent revision of formula on retirement dues

THE Trade Union Congress of Tanzania (TUCTA) has called for an urgent review of the formula for computing retirement benefits, proposing a 50 per cent lump sum payment to retirees as fronted in several other quarters.

The workers’ congress is now calling for dialogue with the government to discuss the widely contested formula, which was introduced in July this year.

TUCTA President Tumaini Nyamhokya told journalists here yesterday that they were yet to react to the development “chiefly because we wanted to have enough time to think over the matter before going public”.

“We plan to seek an audience with the Minister of State in the Prime Minister’s Office (Policy, Parliament, Labour, Employment, Youth and Disabled) in connection with the issue for the benefit of both the government and employees,” he said, adding: “We would appreciate seeing the government buy our recommendation on the new pension computation formula for the good of retirees.”

Under the widely disputed formula, retirees will from now on receive only 25 per cent of their savings in lump sum payments, with the remaining 75 per cent being paid in monthly instalments as pension.

TUCTA want retirees to be paid based using a 1/540: 15.5 computation formula, which would guarantee them payment of lump sum pension amounting to half their total savings.

The Tanzania Higher Learning Institutions Trade Union (THTU) last week recommended a 50 per cent lump sum payment to retirees, with the remaining half of their contributions plus interest be paid in monthly pension instalments.

THTU national chairman Dr Paul Loisulie said in a statement released in Dodoma that owing to protracted debate over the issue, “it is obvious that people are not happy with the new computation of retirement benefits as per Public Service Social Security Fund Act, 2018 regulations which set the lump sum amount at 25 per cent of contributions with the remaining 75 per cent being paid in monthly pension instalments”.

Esther Bulaya, Shadow Minister of State in the Prime Minister’s Office responsible for policy, parliamentary affairs, labour, employment, youth and people with disabilities, on Tuesday reported putting final touches to a private motion for tabling in the National Assembly challenging the widely disputed system of computing retirement benefits.

Addressing journalists in Dar es Salaam, the Chadema Bunda Urban legislator said she wants the House to intervene by suspending the regulations of the Public Service Social Security Fund Act, 2018.

Critics argue that before the new law came into effect, pensioners in Tanzania pocketed between 50 and 75 per cent of their contributions while it was only the amount that was paid in monthly pension instalments.

The disputed formula touched off a storm after retirees who received their pensions under the new arrangement complained that the new law gave workers in the country a raw deal.

The debate became especially intense on social media after it emerged that ministers and deputy ministers as well as other legislators, who it is that endorsed the changes, are conspicuously spared by the contested changes.

Instead, just as applies to the President, Vice President and Prime Minister, all MPs receive their gratuity in full at the end of each five-year term served.

Last week, though, Social Security Regulatory Authority (SSRA) director general Irene Isaka sought to dismiss as baseless widely circulating suggestions that the disputed formula was devised purposely to save the country’s social security schemes from bankruptcy following a borrowing spree by the government and consequent investment in non-viable projects.

The National Assembly in January this year endorsed for presidential assent the Public Service Security Fund Bill, of 2017, and it soon graduated into a law.

The Act repealed and replaced then-existing laws establishing the Public Service Pensions Fund (PSPF), Government Employees Provident Fund (GEPF), LAPF Pensions Fund, and PPF Pensions Fund. These four pension schemes have since been merged into the Tanzania Public Service Social Security Fund (TPSSF), a giant boasting over 5 trillion/- in assets.

The new law also effectively means that public employees previously making mandatory monthly contributions to the National Social Security Fund (NSSF) are automatically transferred to TPSSF, with the former now serving only private sector employees.