HakiPensheni

POAC directs pension funds to enter into formal contracts with government

By Emmanuel Onyango

19th January 2013

POAC Chairman Zitto Kabwe

The Parliamentary Public Organizations Accounts Committee (POAC) has ordered social pension funds to sign formal contract when they finance government projects.

The call by the POAC members comes after it discovered that the government was borrowing money from these funds without written contracts, making it difficult to follow up such loans for audit purposes.

POAC Chairman Zitto Kabwe said yesterday in Dar es Salaam that the government owes the various pension funds at least one trillion shillings.

He said that the money was indicated in records but does not show when it would be refunded since there were no contracts signed between the government (borrowers) and the social security firms (lenders).

In view of these irregularities, the POAC has ordered security firms to ensure that contracts were duly written whenever the government comes to borrow money -- so that auditors could prepare comprehensive financial reports about their firms.

Zitto who is MP for Kigoma North on CHADEMA ticket issued the directive yesterday after his committee had gone through a quarterly financial report of the Local Authorities Pension Funds (LAPF) -- which it finally declared “clear and correct.”

“Why should the government depend on borrowing money from the pension funds?” He quarried, insisting the funds exercise utmost care in keeping correct data of the borrowed money.

“I am not saying the government should not borrow the money … but there must be contracts to show when will it be refunded as the law stipulates,” he said, adding that this the best way to keep the financial records properly.

He said the government largely depends on the security pension funds to finance its various development projects such as the proposed Kigamboni bridge currently being financed by NSSF and many others.

He noted that his committee had since discovered that there was no formal contract made between the two parties to show when the money would be refunded, arguing this was a dangerous trend – because the money involved belonged to contributors.

The committee also ordered pensions funds to collect all outstanding debts from its customers (employers) and ensure that they all pay their employees’ dues upon retirement in full.

At their meeting yesterday, the POAC praised the LAPF for the good job it had done and also for having emerged the best run social security fund in terms of well audited financial statements for the year 2011.

Originally, the LAPF dealt exclusively with employees of the district councils across the country but is now accepting contributions from any sector – under which people employed by the central government can choose either to join with the fund or join the PSPF.

The LAPF was established by the LAPF Act No. 9 of 2006 which repealed the Local Authorities Provident Fund Act No. 6 of 2001.