Overhaul of pension system needed

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Government yesterday said it was mulling a raft of pension reforms that will, at the very least, assure retiring civil servants of some form of social safety net in their ripe ages.

It’s about time too.

However, what is needed is not just assurance of a passive income in their ripe years for civil servants alone. There is need for an overhaul of the entire pension system in Zimbabwe so that it really benefits all contributors, both in the public and private sector.

We saw in the last decade what the absence of a proper safety net for the elderly did to our senior citizens. Their lifetime savings just withered away and many greedy insurance and pension companies and societies took advantage and further deserted the aged.

A society that rewards its senior citizens with abject poverty in the twilight of their life is indeed a sick society. It is a sign of ingratitude for the years of service these people would have dedicated to a positive contribution to the growth of the economy in their heyday and for posterity.

The current position, where pensioners receive a paltry US$40 a month from NSSA is untenable. Naturally, as people get older, their needs, especially health needs, increase. They need better food, warmer clothing and accommodation.

Assuming a pensioner did not manage to purchase a house as is the case with many, where could they rent for US$10 a month, i.e. if we use one of the international benchmarks where accommodation should not account for more than 25% of monthly income?

Of critical importance according to Finance minister Tendai Biti’s statement is the transferability of contributions from one pension scheme to another.

The old method, where the contributions from each company an individual worked for during their working life were saved separately was inimical to growth in the value of the contributions.

The system was probably designed to discourage mobility from one workplace to another.

However, in the modern age, sticking to one company for one’s duration of their working life is no longer desirable.

In today’s highly competitive market, work experience in different working environments is considered positive, as one would be bringing to the new company the wealth of experience they have had elsewhere.

Indeed, the ultimate indicator of a successful economy is its ability to look after its aged. Because of increased life expectancy in spite of HIV and Aids, the demographics of the country are changing in favour of the elderly.

A basic demographic graph today should depict a wide base and increasingly widening, though thinner-than-base apex.

With that in mind, it is clear that a well thought-out pension scheme should be put in place to cater for retirees in the next two sets of decades to come, where pressure for annuities should rise exponentially.

From a political standpoint, these very same elderly shall constitute a formidable part of the electorate whose vote can easily upset any predicted outcome. The Italian pensioners’ party is a case in point.