PENSION funds had outstanding loans amounting to 1.73trn/- issued to government institutions and other organisations in the last audited year, the National Assembly was told yesterday.

Controller and Auditor General (CAG) Charles Kichere says in his 2022/23 annual report that the National Social  Security Fund (NSSF) had outstanding loans amounting to 1.5trn/- whereas in 2021/22 unpaid loans stood at 1.17trn/-, a 330bn/- increase.

The Public Service Social Security Fund (PSSSF) during fiscal 2022/23 had outstanding loans of 231.40bn/-, unchanged from fiscal 2021/22, he said.

The loans have been outstanding for periods ranging from one to 16 years, with the failure of the borrowers to repay them affecting the ability of pension funds “to exercise their core functions effectively and efficiently,” he stated.

There is a long outstanding loan of 148.08bn/- borrowed as 40 percent of the total construction cost of the Nyerere Bridge project, where the government had committed to settle the balance via non-cash bonds, he said.

“I reiterate my previous recommendation that the Ministry of Finance in collaboration with government institutions which borrowed from pension funds make fruitful arrangements for loan repayments,” he emphasised.

Pension funds similarly need to enhance controls before issuing loans and follow-up outstanding loans with various government institutions to ensure that all overdue loans are recovered, he specified.

In another development, the CAG review on NSSF found a contribution receivable amounting to 710bn/- that it failed to collect, affirming that 330bn/- (46 percent) out of 710bn/- remained outstanding for more than 12 months.

This is contrary to the NSSF Act of 2018 that requires the contributing employer to pay contributions to the fund within one month after the month in respect of which the contributions are due and payable, he asserted.

NSSF informed the CAG of efforts taken to enforce the remittance of contributions from defaulting employers, like issuance of demand letters, filing 126 contribution cases relating to 35.89bn/- against such employers, and the formation of a special collection enforcement team drawing members from different government institutions.

At the Workers Compensation Fund (WCF), the CAG found that contributions receivable amounting to 13.54bn/- (44 percent) out of 30.83bn/- of total have collectability issues as 12.65bn/- was in respect of 4,124 employers with dormant businesses, while 891.14m/- was in respect of 590 employers who had closed businesses.

“Further, my review of the PSSSF’s debtors aging report found outstanding receivable contributions amounting to 102.36bn/- (77 percent) out of 133.24bn/- remained outstanding for over 122 days, contrary to the PSSSF Act, 2018.

It requires an employer to contribute within one month after the end of each month to which it relates, he said, noting that delays in the collection of receivables could affect the ability of the fund to meet its maturing benefits commitments.

NSSF, PSSSF and WCF need to engage with employers and encourage them to sign settlement deeds that include a payment plan for outstanding contributions, he said.

This approach will ensure commitment from the members to settle the outstanding arrears in a structured manner, he added.