Tanzania pension schemes seek to hold members’ cash

Saturday September 24 2016

Social security and pension schemes in Tanzania are pushing for amendments to the Social Security Act to prevent members from making withdrawals and receiving benefits before attaining retirement age. FILE | TEA GRAPHIC |

Social security and pension schemes in Tanzania are pushing for amendments to the Social Security Act to prevent members from making withdrawals and receiving benefits before attaining retirement age. FILE | TEA GRAPHIC  NATION MEDIA GROUP

By APOLINARI TAIRO

Social security and pension schemes in Tanzania are pushing for amendments to the Social Security Act to prevent members from making withdrawals and receiving benefits before attaining retirement age.

However, some stakeholders have opposed the move, saying it unfairly denies workers the right of access to their money when they leave formal employment.

Withdrawal of benefits before retirement age was banned in 2012, but after a public outcry parliament lifted the ban later that year. The Social Security Regulatory Authority (SSRA) is now pushing for the reinstatement of the law.

If the Social Security Act (Amendment) Bill 2016 is passed, a member who loses their job or resigns will have to wait until they reach the age of 55 to get their benefits.

Trade Union Congress of Tanzania secretary general Nicolaus Mgaya said the government has no right to deny workers their basic rights to join a social security fund of their choice or shifting their benefits to a more profitable pension scheme.

“We had submitted to the government the proposal to give employees the right to withdraw their benefits from less profitable pension schemes to more viable ones with higher returns,” Mr Mgaya said.

Esther Bulaya, a member of parliament from the opposition Chama Cha Demokrasia na Maendeleo (Chadema), said the amendment is aimed at oppressing workers.

“This Bill is non-beneficial to both the workers and retired personnel, but it benefits the government as it borrows from pension schemes,” Ms Bulaya said.

Pension schemes are concerned about going bankrupt if members withdraw all their contributions.

Presidential directive

President John Magufuli had directed all pension funds to invest in industry so as to speed up the country’s industrialisation programme.

Tanzania has six social security institutions with a total of 2.1 million members who hold Tsh1.78 trillion ($880 million). Some 105,057 members are retired.

SSRA director general Irene Isaka said discussions are being held with members and institutions.

“There is a proposal under discussion to find a lasting solution to withdrawal of benefits through a parliamentary resolution that would give members the best option.

“When the bill law is amended, members will have access to their contributions at recommended percentages,” Ms Isaka said.

The National Social Security Fund is the leading pension scheme in Tanzania with almost one million members and huge investments in real estate.

NSSF is now looking to invest in industries in response to President Magufuli’s call. The fund is building a sugar factory, and has set aside 63,000 acres for sugarcane cultivation in Morogoro region, 200 kilometres southwest of Dar es Salaam.

Social security and pension schemes saw their assets increased from Tsh4.4 trillion ($2.75 billion) in 2011 to Tsh5.6 trillion ($3.5 billion) in 2012. The total assets of the NSSF are valued at more than Tsh3 trillion ($1.5 billion).

Together with other social security institutions, NSSF had invested over $150 million in the construction of the University of Dodoma, now the largest learning institution in Tanzania with a capacity to accommodate 40,000 students.