The $40 minimum monthly National Social Security Authority (NSSA) retirement pension came under the spotlight at a meeting of senior company officials and trade union representatives in Kadoma recently.
There was general agreement $40 was inadequate, though NSSA officials and an independent actuary explained why it was the most NSSA could pay at the moment.
NSSA had invited representatives of the Zimbabwe Congress of Trade Unions, the Zimbabwe Federation of Trade Unions and civil servants Apex Council to the meeting, to explain the workings of NSSA’s social security schemes and discuss issues of mutual concern.
Board chairperson Innocent Chagonda, general manager James Matiza and NSSA’s directors of benefits, contributions and compliance, and investments, addressed delegates and discussed issues with them.
Actuary Pelagia Kafeso explained the role of the independent actuary in offering NSSA advice on benefits and contributions levels and the maintenance of adequate reserves to ensure the payment of future benefits.
She said pension payable was a function of a contributor’s pensionable salary, number of years of service and an accrual rate, which was 1,33% for the first 30 years of pensionable service and 2,33% thereafter.
The monthly pension was determined by multiplying the pensionable salary by the number of years contributions had been made for and by 1,33%.
The calculation for a person retiring now, therefore, who had contributed to the scheme since inception 17 years ago would be 1,33% of 200 multiplied by 17, which came to just over $45.
Matiza said a person earning $1 000 a month would, if there was no insurable earnings ceiling, receive a pension of $226 using the same formula. With the ceiling it remains $45.
If such a person contributed for 30 years and there was no earnings ceiling, the pension would be around $400.
Chagonda said higher contributions from employees meant higher contributions from employers too, since they paid the same amount as the employee.
He noted employers were often contributing to private occupational pension schemes, at much higher levels and often had other contributions to make to various things such as to the National Employment Council and medical aid societies and tended to be resistant, therefore, to an increase in contribution rate and lifting of the ceiling, which would add to their costs.
Apex representatives stressed the urgency of a meeting between NSSA, the government and Apex concerning arrears that were owed civil servants.
If paid, the first civil servants to be eligible for the NSSA pension would become eligible in the course of next year.
Other suggestions that were made included varying the contributions according to economic sectors, in line with their strength, a bulletin in which employers who are forwarding contributions to NSSA are listed, so employees could identify whether or not their employers were complying and involving workers’ committees in looking into whether employers are complying or not.