HakiPensheni

Pension funds told to cover informal sector

By Edwin Agola

26th May 2010

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Vice-President Dr Mohamed Shein

Despite government efforts to stimulate economic growth and create jobs, the number of Tanzanians covered by different social security schemes in the country has remained stagnant during the last 10 years as the majority have no social security cover.

Speaking at the annual general meeting of the Government Employees Provident Fund (GEPF) after reading a speech on behalf of Vice-President Dr Mohamed Shein, Minister for Finance and Economic Affairs Mustafa Mkulo said by the time he retired as director general of the National Social Security Fund (NSSF) 10 years ago, statistics showed that less than a million people had limited or no access to a formal social security fund and to date, the statistics were still the same.

“Something must be wrong somewhere and unless this problem is addressed to ensure the majority of people access social security funds, they will continue to be vulnerable and mostly affected by poverty and economic insecurity,” Mkulo said.

In his speech, Dr Shein outlined the importance of extending social security cover to the informal sector.

Dr Shein said as of January 2010, social security institutions in Tanzania were six in the mainland and one in Zanzibar, whereby each of them covered a defined category of people and each was established by a different law.

“Some of these schemes have implemented parametric reforms to adapt to changes brought about by the changing socio-economic environment, the latest being the one I am launching to cover areas previously not covered by other schemes,” he said.

Dr Shein said the GEPF reform took on board a voluntary saving retirement scheme for self-employed and informal sector members and, consequently, the scope and depth of benefits such as loan facilities to members through micro-finance institutions.

Notwithstanding, he said the implementation of strategies by GEPF focused on extending coverage that would enable more Tanzanians access social security cover.

Earlier, Finance and Economic Affairs Deputy Minister Omar Yusuf Mzee said the dependency ratio in the country was 1:5, whereby one person who earns a regular salary has five dependants, some of whom were elderly people without social security cover.

He said most Tanzanians were being excluded from social security cover due to a tendency by many funds to establish insurance schemes suited to persons with regular salary, and since such people worked for an employer there was a justification for a system of financing, which included employer contribution.

For her part, GEPF board chairperson Monica Mwamunyange said the extension of social security cover to the self-employed was easier to achieve in respect of people who had a well established business or profession, which was readily identifiable and which produced a level of income which left a scope for contributing to future social protection.

SOURCE: THE GUARDIAN