HakiPensheni

Harmonise pension benefits - Kikwete

By Edwin Agola

24th March 2011

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President Jakaya Kikwete has called for harmonisation of pension benefits and reduction of the funds’ management costs.

He made the call when launching the Social Security Regulatory Authority (SSRA) Board of Directors in Dar es Salaam yesterday.

“I challenge you to rectify the trend whereby one member of a social security scheme, who served almost the same period, receives a pension which is three times that of another member from another fund. I don’t mean you impose a flat rate. No! that would be tantamount to having all the eggs in one basket which is dangerous for the wellbeing of the country,” said the President.

He pointed out that the average 12 per cent management cost within the social security organs is more than twice the recommended five per cent standard in the world.

He was however pleased that an expert has been engaged to study the problem and advice the government accordingly.

President Kikwete directed the newly launched board to address the long standing cry from retirees that pension paid to them did not take into account the inflation rate.

Another area that President wanted the board to look into was how to broaden the base of those covered by social security firms by embarking on a campaign focusing on the informal sector.

“Data availed to me shows that only a dismal 3.5 per cent of pensionable workers are covered by social security firms. You should sensitise people on the opportunity cost; ask them to sacrifice a bit of luxury.

I am told every Tanzanian spends an average of 500/- on the mobile phone daily, yes! Ask them to spare the money spent on beer and contribute to the pension fund for their benefit when they retire,” said the president.

According to President Kikwete, the economy offered vast opportunities in benefits and challenged social security firms to knock their heads and target the elderly people, who he said if fully covered, would compliment government efforts of alleviating poverty by 10 per cent.

He pointed out that with assets valued at 10 per cent of the Gross Domestic Product (GDP) and 25 per cent of all bank deposits, social security firms have the financial muscle to spur economic growth and wellbeing of the society.

“You have substantial resources, therefore having SSRA in place is critical,” he said.

The President stressed the need for the funds to reduce risk exposure when making investment decisions and instead to embark on ventures whose repayment period is short.

He asked SSRA to come up with sustainable sources of income and avoid depending on contributions from social security funds, terming the tendency as killing the goose that lays the golden egg.

Earlier, SSRA Board Chairman Siraju Kaboyonga informed the President that within a short period they have been able to implement a number of activities including having a board, hiring staff, recommending amendments in the Act governing social security funds and carrying out actuarial valuations.

Challenges which the authority faced included budget constraints, dismal coverage base, harmonisation of pension benefits and the contribution of the sector to the GDP.

Kaboyonga cited interference by politicians when it comes to where to invest as a major challenge to the funds almost on a daily basis and that at times the interference doesn’t take into consideration viability of the proposed projects.

SOURCE: THE GUARDIAN