By Editor
28th May 2010
While almost half the over 40 million Tanzanians are employed in the formal sector, most of the rest eke out a living in the informal sector, including agriculture, construction, big and small business and other income generating activities.
Unfortunately, people engaged in the informal sector operate in an atmosphere that is far from conducive right from the point that it is a nightmare for most to secure loans given the stringent conditions set by banks and other financial institutions.
They are therefore forced to toil especially hard, supported by very meagre resources, with many stumbling and falling along the way. Those who make it often spend sleepless nights struggling but earning little.
As they grow older, they again find themselves victims of another serious anomaly: a social security system that caters only for workers in the formal sector, leaving those in the informal sector to fend for themselves.
Finance and Economic Affairs minister Mustafa Mkulo, CEO of the mighty National Social Security Fund (NSSF) before he retired ten years ago, says it is appalling that less than a million Tanzanians have access to a formal social security fund.
He made the remarks in talks with workers of the Government Employees Provident Fund (GEPF) early this week, saying this was wrong, unacceptable and must be addressed to ensure that the majority of the people access social security funding.
We believe that this is the time to act. Social security funds fall under the docket of the Treasury, now headed by a man with immense experience in social security matters.
What should be underlined here is that without social security, most Tanzanians now excluded will continue to be most vulnerable to poverty and economic insecurity.
There are six social security institutions on the Mainland and one in Zanzibar, and we believe all that is required is political will and firm resolve by the government to ensure that security funds change the rules of the game and move away from covering only a fortunate few and instead reach all Tanzanians.
It needs a change in mindset. This is because of the fondness by many funds of establishing insurance schemes suited only to people with regular remuneration where such people work for an employer with a system of financing which included employer contribution.
Change is crucial especially in Tanzania where statistics show that one person who earns regular income can have as many as five dependants, some of them elderly people without any social security cover.
We understand the GEPF has been working on a new pension scheme that seeks to accommodate workers in the informal sector. The move is reportedly designed to wean the fund off near-total dependency on people engaged by the government on contractual basis and would shift from GEPF to the Public Sector Pension Fund (PSPF) when they graduate into permanent government employees.
While we congratulate GEPF for the move, we wish to urge the Treasury and social security institutions to act fast and correct this anomaly. To the extent that these institutions are public, they are duty bound to stand as such.
SOURCE: THE GUARDIAN
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Zanzibar Social Security Fund
Nssf_New
Monday, July 4, 2011
Social security body for Mwanza meeting
By The guardian reporter
26th January 2010
The East and Central Africa Social Security Association (ECASSA) is set to hold a second meeting in Mwanza Region by the end of this month.
A statement issued yesterday in Dar es Salaam said the meeting is to discuss pertinent issues on leadership and social security governance in Tanzania.
The meeting would bring together various stakeholders and social security policymakers to discuss and find solutions to issues and challenges that the sector faces.
The meeting is expected to gather 150 participants from eight countries and 45 institutes.
“Ministers responsible for social security from member countries, permanent secretaries and board members from social security institutions, chief executives and senior officers are expected to participate,” it said.
It said the theme of the meeting is “social security governance”, adding that some of the agenda items to be discussed include issues of leadership and social security governance, portability of benefits, microeconomic impact of social security and social protection floor.
The first meeting was held in Mombasa, Kenya in November 2008 which decided on the importance of having a department to deal with social security matters in the East African community, social security leadership and expansion of social security issues.
ECASSA was established in Kigali, Rwanda, on March 31, 2007 after 15 heads of social security institutions signed an agreement to establish the association.
SOURCE: THE GUARDIAN
26th January 2010
The East and Central Africa Social Security Association (ECASSA) is set to hold a second meeting in Mwanza Region by the end of this month.
A statement issued yesterday in Dar es Salaam said the meeting is to discuss pertinent issues on leadership and social security governance in Tanzania.
The meeting would bring together various stakeholders and social security policymakers to discuss and find solutions to issues and challenges that the sector faces.
The meeting is expected to gather 150 participants from eight countries and 45 institutes.
“Ministers responsible for social security from member countries, permanent secretaries and board members from social security institutions, chief executives and senior officers are expected to participate,” it said.
It said the theme of the meeting is “social security governance”, adding that some of the agenda items to be discussed include issues of leadership and social security governance, portability of benefits, microeconomic impact of social security and social protection floor.
The first meeting was held in Mombasa, Kenya in November 2008 which decided on the importance of having a department to deal with social security matters in the East African community, social security leadership and expansion of social security issues.
ECASSA was established in Kigali, Rwanda, on March 31, 2007 after 15 heads of social security institutions signed an agreement to establish the association.
SOURCE: THE GUARDIAN
Mkullo: Government to appoint Social Security Funds watchdog CEO soon
By The guardian reporter
5th January 2010
Minister of Finance and Economics Affairs, Mustafa Mkulo
The appointment of the Chief Executive Officer (CEO) for Tanzania’s Social Security Regulatory Authority (SSRA) is to be announced anytime from now, the Minister of Finance and Economics Affairs, Mustafa Mkulo told The Guardian yesterday.
The finance minister was not sure, however if the proposed name for appointment had been sent to State House for approval.
He clarified that his role in the soon to be established SSRA will be 40 per cent with the role of the Minister for Labor and Youth development taking the lead role of 60 per cent.
The proposed name of the appointee in this arrangement is supposed to be sent to State House by the Minister for Labour and Youth Development, Prof Juma Kapuya.
Minister Kapuya hung up his phone when contacted to talk about the appointment yesterday. The International Monetary Fund (IMF) has advised Tanzania to speed up formation of the Social Security Regulatory Authority to enhance growth of the industry and curb misuse of workers' savings, the local media reported yesterday.
In its response to a letter of intent by the Minister of Finance and Economic Affairs, Mr Mustafa Mkulo, the IMF said SSRA was crucial in regulating pensions and other related services.
"Beyond the banking system, continued absence of social security regulator remains a significant weakness in the economy," reads part of the IMF's statement.
IMF said although Tanzania's financial system has not been directly affected by the global crisis, supervision should remain vigilant and gaps in the framework plugged.
Minister Mkulo said in his letter of intent to IMF in November, last year that investment guidelines for the pension funds, incorporating views from stakeholders, had been drafted and would soon become operational.
"A budget allocation for the pension regulator has been provided and new actuarial reviews of each of the pension funds are underway," he said.
The Minister for Labour, Employment and Youth Development, Prof Juma Kapuya, told the 'Daily News' recently that the recruitment of the management of regulator was still on, but was not sure as to when the chief executive would be picked.
"We have finished recruitment of some workers in some levels, but the decision on the chief executive is beyond my jurisdiction," he noted.
The law establishing an independent regulator of social security schemes was enacted in 2008.
The regulator will help pension funds to operate more efficiently and ensure their members are the main beneficiaries of respective schemes.
The government expects that the number of employees joining the social security schemes will increase, when their operations are regulated.
The Controller and Auditor General (CAG) has often in his annual reports criticised some pension funds for mismanaging public funds.
SOURCE: THE GUARDIAN
5th January 2010
Minister of Finance and Economics Affairs, Mustafa Mkulo
The appointment of the Chief Executive Officer (CEO) for Tanzania’s Social Security Regulatory Authority (SSRA) is to be announced anytime from now, the Minister of Finance and Economics Affairs, Mustafa Mkulo told The Guardian yesterday.
The finance minister was not sure, however if the proposed name for appointment had been sent to State House for approval.
He clarified that his role in the soon to be established SSRA will be 40 per cent with the role of the Minister for Labor and Youth development taking the lead role of 60 per cent.
The proposed name of the appointee in this arrangement is supposed to be sent to State House by the Minister for Labour and Youth Development, Prof Juma Kapuya.
Minister Kapuya hung up his phone when contacted to talk about the appointment yesterday. The International Monetary Fund (IMF) has advised Tanzania to speed up formation of the Social Security Regulatory Authority to enhance growth of the industry and curb misuse of workers' savings, the local media reported yesterday.
In its response to a letter of intent by the Minister of Finance and Economic Affairs, Mr Mustafa Mkulo, the IMF said SSRA was crucial in regulating pensions and other related services.
"Beyond the banking system, continued absence of social security regulator remains a significant weakness in the economy," reads part of the IMF's statement.
IMF said although Tanzania's financial system has not been directly affected by the global crisis, supervision should remain vigilant and gaps in the framework plugged.
Minister Mkulo said in his letter of intent to IMF in November, last year that investment guidelines for the pension funds, incorporating views from stakeholders, had been drafted and would soon become operational.
"A budget allocation for the pension regulator has been provided and new actuarial reviews of each of the pension funds are underway," he said.
The Minister for Labour, Employment and Youth Development, Prof Juma Kapuya, told the 'Daily News' recently that the recruitment of the management of regulator was still on, but was not sure as to when the chief executive would be picked.
"We have finished recruitment of some workers in some levels, but the decision on the chief executive is beyond my jurisdiction," he noted.
The law establishing an independent regulator of social security schemes was enacted in 2008.
The regulator will help pension funds to operate more efficiently and ensure their members are the main beneficiaries of respective schemes.
The government expects that the number of employees joining the social security schemes will increase, when their operations are regulated.
The Controller and Auditor General (CAG) has often in his annual reports criticised some pension funds for mismanaging public funds.
SOURCE: THE GUARDIAN
LAPF best social security fund for 2008By Adam Ihucha 15th December 2009 Email Print Comments The National Board of Accounts and Auditors (NBAA) has named the Local Authorities Pension Fund (LAPF) as the best social security fund in terms of well audited accounts in 2008. "LAPF emerged the best in terms of presenting well audited financial statement for 2008, outsmarting several others in the social security funds category," NBAA Governing Board Chairman Dr Mussa Assad said at the award giving gala organised alongside the Annual Accountants Conference in Arusha at the weekend. Dr. Assad said the LAPF financial statement of the year was done in accordance with international financial reporting standards. Finance and Economic Affairs deputy minister Jeremiah Sumari handed over the prize to LAPF Director General Eliud Sanga during the colorful ceremony. Government Employees Provident Fund (GEPF) and National Health Insurance Fund (NHIF) ranked second and third respectively, within the same category. “NBAA Best Presented Accounts Award 2008 is not only an award for finance departments alone, but also an honour for the entire LAPF institution,” said LAPF Director for Finance John Kida, shortly after the event. Kida added that the award was not only an indicator of improvement of performance and financial security reporting, but also portrayed the LAPF management’s accountability. “We are managing colossal amounts of money of our members so the best financial statement for the year 2008 is the best method of understanding the financial health of LAPF and how its workers are accountable,” Kida said. LAPF was established in 1944 and was mandated to create a single fund for all local authorities’ employees in the then colonial Tanganyika. In 1972 Town and District Councils were abolished and the fund became dormant. It was revived in the 1986/1987 financial year, under Section 16 of the Local Government Service Commission Act, Number 10 of 1982, following the re-establishment of Town and District Councils in 1982. In 2006 it was converted from a provident to a pension fund through the enactment of the Local Authorities Pension Fund Act Number 9 of 2006, passed by Parliament in November 2006. Before LAPF was revived it operated under the Local Authorities Provident Fund Act no. 6, of 2000. SOURCE: THE GUARDIAN 0 Comments | Be the first to comment More News Articles Rwanda happy with efforts to curb fuel adulteration Tanzania permitted to mine uranium in Selous Govt starts enforcing law on spectacle sales Moi, Mwinyi press for enhanced EAC integration Lawmaker wants new media policy publicised Minister quizzed in Parliament on Deci Isles govt urged to buy local office furniture Govt to form board on domestic workers` conditions Alerts | Contact us | Lokopromo ippmedia.com © 1998-2010. All rights reserved
By Adam Ihucha
15th December 2009
The National Board of Accounts and Auditors (NBAA) has named the Local Authorities Pension Fund (LAPF) as the best social security fund in terms of well audited accounts in 2008.
"LAPF emerged the best in terms of presenting well audited financial statement for 2008, outsmarting several others in the social security funds category," NBAA Governing Board Chairman Dr Mussa Assad said at the award giving gala organised alongside the Annual Accountants Conference in Arusha at the weekend.
Dr. Assad said the LAPF financial statement of the year was done in accordance with international financial reporting standards.
Finance and Economic Affairs deputy minister Jeremiah Sumari handed over the prize to LAPF Director General Eliud Sanga during the colorful ceremony.
Government Employees Provident Fund (GEPF) and National Health Insurance Fund (NHIF) ranked second and third respectively, within the same category.
“NBAA Best Presented Accounts Award 2008 is not only an award for finance departments alone, but also an honour for the entire LAPF institution,” said LAPF Director for Finance John Kida, shortly after the event.
Kida added that the award was not only an indicator of improvement of performance and financial security reporting, but also portrayed the LAPF management’s accountability.
“We are managing colossal amounts of money of our members so the best financial statement for the year 2008 is the best method of understanding the financial health of LAPF and how its workers are accountable,” Kida said.
LAPF was established in 1944 and was mandated to create a single fund for all local authorities’ employees in the then colonial Tanganyika.
In 1972 Town and District Councils were abolished and the fund became dormant. It was revived in the 1986/1987 financial year, under Section 16 of the Local Government Service Commission Act, Number 10 of 1982, following the re-establishment of Town and District Councils in 1982.
In 2006 it was converted from a provident to a pension fund through the enactment of the Local Authorities Pension Fund Act Number 9 of 2006, passed by Parliament in November 2006. Before LAPF was revived it operated under the Local Authorities Provident Fund Act no. 6, of 2000.
SOURCE: THE GUARDIAN
15th December 2009
The National Board of Accounts and Auditors (NBAA) has named the Local Authorities Pension Fund (LAPF) as the best social security fund in terms of well audited accounts in 2008.
"LAPF emerged the best in terms of presenting well audited financial statement for 2008, outsmarting several others in the social security funds category," NBAA Governing Board Chairman Dr Mussa Assad said at the award giving gala organised alongside the Annual Accountants Conference in Arusha at the weekend.
Dr. Assad said the LAPF financial statement of the year was done in accordance with international financial reporting standards.
Finance and Economic Affairs deputy minister Jeremiah Sumari handed over the prize to LAPF Director General Eliud Sanga during the colorful ceremony.
Government Employees Provident Fund (GEPF) and National Health Insurance Fund (NHIF) ranked second and third respectively, within the same category.
“NBAA Best Presented Accounts Award 2008 is not only an award for finance departments alone, but also an honour for the entire LAPF institution,” said LAPF Director for Finance John Kida, shortly after the event.
Kida added that the award was not only an indicator of improvement of performance and financial security reporting, but also portrayed the LAPF management’s accountability.
“We are managing colossal amounts of money of our members so the best financial statement for the year 2008 is the best method of understanding the financial health of LAPF and how its workers are accountable,” Kida said.
LAPF was established in 1944 and was mandated to create a single fund for all local authorities’ employees in the then colonial Tanganyika.
In 1972 Town and District Councils were abolished and the fund became dormant. It was revived in the 1986/1987 financial year, under Section 16 of the Local Government Service Commission Act, Number 10 of 1982, following the re-establishment of Town and District Councils in 1982.
In 2006 it was converted from a provident to a pension fund through the enactment of the Local Authorities Pension Fund Act Number 9 of 2006, passed by Parliament in November 2006. Before LAPF was revived it operated under the Local Authorities Provident Fund Act no. 6, of 2000.
SOURCE: THE GUARDIAN
Two sides of social security fund coin
By Mbena Mwanatongoni
30th August 2009
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The story of a humble peasant in Arusha Region’s Karatu District is replicated somewhat by the agonising experience of many members of the National Social Security Fund (NSSF).
The long deceased peasant, whose story is recounted through a son who wishes to remain anonymous, surrendered much of his earnings from the sale of wheat to a wealthy farmer for safe custody.
He withdrew small sums periodically from the informal banker – a close friend --who, on the surface, was trustworthy because proper records were kept and the informal client didn’t lose a single cent.
Beneath the surface, however, the “banker” who didn’t charge his informal client any service charges, was profiting from the latter’s savings, which he re-invested in his farming business.
The son, now in his late 50s, explains sorrowfully: “Our father’s friend had been wealthy, alright, but our father’s savings made him wealthier and faster, through re-investment in his wheat farms.”
He says his late father, who had not had the benefit of advanced schooling and exposure to commercial tricks, had no idea that if he had invested money that he had entrusted to his friend into his own farms, he would have elevated his economic fortunes considerably.
The son lamented that by the time the children had become sufficiently grown-up, they discovered the trickery and sounded off their father, he had already been on the verge of retirement.
“He ceased to use the friend as a banker, but there was no legal basis on which he could press him for interest on the savings that boosted his economic fortunes,” he lamented further.
Nearly 500,000 private sector employees contribute to the NSSF, which was established by an Act of Parliament in 1997 to replace the National Provident Fund (NPF).
Unlike the Karatu peasant whose association with his friend was based purely on mutual trust, an NSSF member is protected by legal provisions under which one’s savings are protected, and an employer tops up a percentage of one’s contributions slashed from monthly salaries.
The contributor, furthermore, enjoys some interest and a number of statutory long-term pension benefits upon retirement, invalidity or death, allowing the member’s survivors to enjoy the contributions.
There are also short-term benefits for the fund’s members in the form of funeral grants, benefits for maternity, employment injury or occupational diseases and health insurance.
But while some members appreciate the Fund’s benefits, they feel they are latter-day versions of the Karatu peasant, and want adjustments made to make them more beneficial clients of NSSF.
They are proposing that the Parliamentary Act should be amended to incorporate a clause that allows them to borrow from their contributions in order to solve pressing financial problems.
A middle-aged man who identified himself by one name, Yakubu, said he is often tempted to retire prematurely in order to reap benefits from his current NSSF contributions, rather than await presumably bigger benefits when he clocks 60 years.
Under the current arrangement, a member who attains that age and has made contributions for an unbroken chain of 15 years (a total of 160 months) gets a lump-sum, plus a monthly pension until he/she dies.
He recounts that two years ago, he bought a two-acre piece of land at Kifuru village in Dar es Salaam Region’s Kinondoni District for a total of Sh700,000 – at the rate of Sh350,000 each.
The man who lives at the Tabata suburb, explains that during regular visits to Kifuru, he has established that the value of land there has shot to Sh2,500,000 per acre, meaning that his farm is now worth Sh5million.
“If I had wanted to buy the piece of land now, I wouldn’t easily raise it through savings from my modest salary. As a last resort, I would take a Sh5million bank loan whose repayment figure could be as high as Sh7million.”
He poses and proceeds: “If I were allowed to withdraw the amount from my NSSF savings currently standing at Sh15million, I would be much happier because I would be spared the indignity of being a debtor and incurring a loss in the form of high bank interest rates.”
He then engages in a bit of arithmetical speculation: “If I cease to be an NSSF member today and invest Sh10million in land at Kifuru or elsewhere, and given the hot cake nature of the property, I most probably would resell it for something like Sh30million in two-to-three years’ time.”
While expressing sympathy for the members’ concerns, the Fund’s authorities say that the corporate organisation could collapse within a short period if it engaged in the business of extending loans to the members, or letting them withdraw parts of their savings.
The alternative, they say, would be for NSSF to plunge itself into the banking industry, which would, among other conditions, entail charging commercial interest rates.
The NSSF Director of Operations, Crescentius Magori, said in an interview: “Once we get involved in banking operations, we cannot avoid commercial interest rates in order for the Fund to survive.
Otherwise, we will be insolvent and consequently unable to pay security benefits to our members.”
According to Magori, there are around 1,600 employers, with whom it is impracticable to meet as one group at once.
He explained, however, that plans are afoot to conduct zonal meetings at which smaller groups of members would meet and discuss issues of interest.
There is also the question of compromise on some of the members who might secure such loans as it is feared that once the loans are misused, they will suffer most when they are not in employment as they would not have much money in their accounts to look after their security.
The Director of Planning, Investments and Policy of NSSF, Yakub Kitula, echoed Magori’s position on the question of extending loans to the Fund’s members, stressing that in order to ensure that the organisation is always solvent, and thus being able at any given time to settle the benefits of its members, it has to invest in sustainable economic projects instead.
Kidula said: “Keeping members’ money without reinvesting it in sustaining projects will likely leave the Fund ending up without the money to serve our members,” adding that companies or corporations can borrow from the Fund because they are required to pay with commercial interest rates.
The prospect of loaning the money to members will dry the organisation of the needy cash when needed by its members, and according to the law, the relation between the organisation and the member is clear: the member’s contributions are kept safely by the Fund which will in turn disburse the benefits accordingly.
NSSF is a compulsory scheme which covers all employees in the private sector, including non-governmental organisations and other groups in the informal sector.
These are embassies based in Tanzania employing Tanzanians, associations and organised groups in the informal sector, government and parastatal employees who are on operational services and temporary employees.
“A member who has just retired from employment but does not meet the qualifying conditions for monthly pension benefits will be entitled to a special lump-sum payment. This will be calculated on the basis of an insured person's monthly contribution at the time the lump-sum becomes payable times the number of months of contribution (contribution credits),” so says the NSSF policy.
But 57-year-old Hamisi Chikawe and 65-year-old Valerian Paul, retired members of the NSSF for about 20 years, both putting up residence at Kibaha Mailimoja Shuleni, want the Fund shaped anew, so that its members, as critical and most important shareholders, should enjoy the accrued benefits from the organisation’s investments.
“I have already been paid my dues, which, in the first place, I suspect were not up to the market value. But fresh consideration of this issue, I believe, is of paramount importance as it is the members’ money that is invested in the projects that are highly paying, though not reflected in the final members’ benefits,” remarked Chikawe.
Paul echoes the sentiments, uncertain on whether the Fund’s projects eventually lift the lives of the people employed by social security body.
Paul adds: “You may not need more proof other than casting a glance at their lifestyles.
The Fund’s objectives are very good, but for the sake of fairness, those managing the institution and the members who pump money into it should share the proceeds accrued from the investments more-or-less equitably.”
SOURCE: GUARDIAN ON SUNDAY
30th August 2009
Comments
The story of a humble peasant in Arusha Region’s Karatu District is replicated somewhat by the agonising experience of many members of the National Social Security Fund (NSSF).
The long deceased peasant, whose story is recounted through a son who wishes to remain anonymous, surrendered much of his earnings from the sale of wheat to a wealthy farmer for safe custody.
He withdrew small sums periodically from the informal banker – a close friend --who, on the surface, was trustworthy because proper records were kept and the informal client didn’t lose a single cent.
Beneath the surface, however, the “banker” who didn’t charge his informal client any service charges, was profiting from the latter’s savings, which he re-invested in his farming business.
The son, now in his late 50s, explains sorrowfully: “Our father’s friend had been wealthy, alright, but our father’s savings made him wealthier and faster, through re-investment in his wheat farms.”
He says his late father, who had not had the benefit of advanced schooling and exposure to commercial tricks, had no idea that if he had invested money that he had entrusted to his friend into his own farms, he would have elevated his economic fortunes considerably.
The son lamented that by the time the children had become sufficiently grown-up, they discovered the trickery and sounded off their father, he had already been on the verge of retirement.
“He ceased to use the friend as a banker, but there was no legal basis on which he could press him for interest on the savings that boosted his economic fortunes,” he lamented further.
Nearly 500,000 private sector employees contribute to the NSSF, which was established by an Act of Parliament in 1997 to replace the National Provident Fund (NPF).
Unlike the Karatu peasant whose association with his friend was based purely on mutual trust, an NSSF member is protected by legal provisions under which one’s savings are protected, and an employer tops up a percentage of one’s contributions slashed from monthly salaries.
The contributor, furthermore, enjoys some interest and a number of statutory long-term pension benefits upon retirement, invalidity or death, allowing the member’s survivors to enjoy the contributions.
There are also short-term benefits for the fund’s members in the form of funeral grants, benefits for maternity, employment injury or occupational diseases and health insurance.
But while some members appreciate the Fund’s benefits, they feel they are latter-day versions of the Karatu peasant, and want adjustments made to make them more beneficial clients of NSSF.
They are proposing that the Parliamentary Act should be amended to incorporate a clause that allows them to borrow from their contributions in order to solve pressing financial problems.
A middle-aged man who identified himself by one name, Yakubu, said he is often tempted to retire prematurely in order to reap benefits from his current NSSF contributions, rather than await presumably bigger benefits when he clocks 60 years.
Under the current arrangement, a member who attains that age and has made contributions for an unbroken chain of 15 years (a total of 160 months) gets a lump-sum, plus a monthly pension until he/she dies.
He recounts that two years ago, he bought a two-acre piece of land at Kifuru village in Dar es Salaam Region’s Kinondoni District for a total of Sh700,000 – at the rate of Sh350,000 each.
The man who lives at the Tabata suburb, explains that during regular visits to Kifuru, he has established that the value of land there has shot to Sh2,500,000 per acre, meaning that his farm is now worth Sh5million.
“If I had wanted to buy the piece of land now, I wouldn’t easily raise it through savings from my modest salary. As a last resort, I would take a Sh5million bank loan whose repayment figure could be as high as Sh7million.”
He poses and proceeds: “If I were allowed to withdraw the amount from my NSSF savings currently standing at Sh15million, I would be much happier because I would be spared the indignity of being a debtor and incurring a loss in the form of high bank interest rates.”
He then engages in a bit of arithmetical speculation: “If I cease to be an NSSF member today and invest Sh10million in land at Kifuru or elsewhere, and given the hot cake nature of the property, I most probably would resell it for something like Sh30million in two-to-three years’ time.”
While expressing sympathy for the members’ concerns, the Fund’s authorities say that the corporate organisation could collapse within a short period if it engaged in the business of extending loans to the members, or letting them withdraw parts of their savings.
The alternative, they say, would be for NSSF to plunge itself into the banking industry, which would, among other conditions, entail charging commercial interest rates.
The NSSF Director of Operations, Crescentius Magori, said in an interview: “Once we get involved in banking operations, we cannot avoid commercial interest rates in order for the Fund to survive.
Otherwise, we will be insolvent and consequently unable to pay security benefits to our members.”
According to Magori, there are around 1,600 employers, with whom it is impracticable to meet as one group at once.
He explained, however, that plans are afoot to conduct zonal meetings at which smaller groups of members would meet and discuss issues of interest.
There is also the question of compromise on some of the members who might secure such loans as it is feared that once the loans are misused, they will suffer most when they are not in employment as they would not have much money in their accounts to look after their security.
The Director of Planning, Investments and Policy of NSSF, Yakub Kitula, echoed Magori’s position on the question of extending loans to the Fund’s members, stressing that in order to ensure that the organisation is always solvent, and thus being able at any given time to settle the benefits of its members, it has to invest in sustainable economic projects instead.
Kidula said: “Keeping members’ money without reinvesting it in sustaining projects will likely leave the Fund ending up without the money to serve our members,” adding that companies or corporations can borrow from the Fund because they are required to pay with commercial interest rates.
The prospect of loaning the money to members will dry the organisation of the needy cash when needed by its members, and according to the law, the relation between the organisation and the member is clear: the member’s contributions are kept safely by the Fund which will in turn disburse the benefits accordingly.
NSSF is a compulsory scheme which covers all employees in the private sector, including non-governmental organisations and other groups in the informal sector.
These are embassies based in Tanzania employing Tanzanians, associations and organised groups in the informal sector, government and parastatal employees who are on operational services and temporary employees.
“A member who has just retired from employment but does not meet the qualifying conditions for monthly pension benefits will be entitled to a special lump-sum payment. This will be calculated on the basis of an insured person's monthly contribution at the time the lump-sum becomes payable times the number of months of contribution (contribution credits),” so says the NSSF policy.
But 57-year-old Hamisi Chikawe and 65-year-old Valerian Paul, retired members of the NSSF for about 20 years, both putting up residence at Kibaha Mailimoja Shuleni, want the Fund shaped anew, so that its members, as critical and most important shareholders, should enjoy the accrued benefits from the organisation’s investments.
“I have already been paid my dues, which, in the first place, I suspect were not up to the market value. But fresh consideration of this issue, I believe, is of paramount importance as it is the members’ money that is invested in the projects that are highly paying, though not reflected in the final members’ benefits,” remarked Chikawe.
Paul echoes the sentiments, uncertain on whether the Fund’s projects eventually lift the lives of the people employed by social security body.
Paul adds: “You may not need more proof other than casting a glance at their lifestyles.
The Fund’s objectives are very good, but for the sake of fairness, those managing the institution and the members who pump money into it should share the proceeds accrued from the investments more-or-less equitably.”
SOURCE: GUARDIAN ON SUNDAY
Employers advised to beef up staff contributions to social security funds
By Nasser Kigwangallah
31st March 2009
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Assistant Labour Commissioner for Social Security David Kaali has called on employers in the country to increase their workers` contributions to social security funds to enable them reap handsome benefits in their retirement.
Kaali made the call at a one-day stakeholders` meeting to discuss social security draft regulations for 2009 in Dar es Salaam on Friday.
The meeting was organized by the Ministry of Labour, Employment and Youth Development and attended by social security funds including the Parastatal Pensions Fund, (PPF), National Social Security Fund (NSSF), Public Service Provident Fund (PSPF), Local Authorities Provident Fund (LAPF), National Health Insurance Fund (NHIF) and Government Employees Provident Fund (GEPF).
Others who attended came from the Prime Minister’s Office (Regional Administration and Local Government), Trade Union Confederation of Tanzania (TUCTA), Association of Tanzania Employers (ATE) and the Ministry of Health and Social Welfare.
The meeting aimed at discussing and reaching a consensus on the draft regulations before they were implemented.
He said the regulations were a follow-up to the passing of the Social Security Authority Act which became law on June 6, 2008.
“Implementation of the Act has started by preparing the draft Social Security Regulations which stakeholders got the chance to discuss,” he said.
University of Dar es Salaam don Prof Josephat Kanywanyi said appointment of people to run the new Social Security Regulatory Authority should be those who are honest and of integrity.
“Corrupt officials with questionable integrity should not be appointed at all to run the schemes which are responsible for safeguarding millions of shillings of members' contributions,” he warned.
He added that employees should use these schemes to contribute their money so that, in their retirement, they should be able to benefit immensely.
SOURCE: THE GUARDIAN
31st March 2009
Comments
Assistant Labour Commissioner for Social Security David Kaali has called on employers in the country to increase their workers` contributions to social security funds to enable them reap handsome benefits in their retirement.
Kaali made the call at a one-day stakeholders` meeting to discuss social security draft regulations for 2009 in Dar es Salaam on Friday.
The meeting was organized by the Ministry of Labour, Employment and Youth Development and attended by social security funds including the Parastatal Pensions Fund, (PPF), National Social Security Fund (NSSF), Public Service Provident Fund (PSPF), Local Authorities Provident Fund (LAPF), National Health Insurance Fund (NHIF) and Government Employees Provident Fund (GEPF).
Others who attended came from the Prime Minister’s Office (Regional Administration and Local Government), Trade Union Confederation of Tanzania (TUCTA), Association of Tanzania Employers (ATE) and the Ministry of Health and Social Welfare.
The meeting aimed at discussing and reaching a consensus on the draft regulations before they were implemented.
He said the regulations were a follow-up to the passing of the Social Security Authority Act which became law on June 6, 2008.
“Implementation of the Act has started by preparing the draft Social Security Regulations which stakeholders got the chance to discuss,” he said.
University of Dar es Salaam don Prof Josephat Kanywanyi said appointment of people to run the new Social Security Regulatory Authority should be those who are honest and of integrity.
“Corrupt officials with questionable integrity should not be appointed at all to run the schemes which are responsible for safeguarding millions of shillings of members' contributions,” he warned.
He added that employees should use these schemes to contribute their money so that, in their retirement, they should be able to benefit immensely.
SOURCE: THE GUARDIAN
Social security covers only five per cent of workforce - Mkulo
4th May 2009
Minister for Finance and Economic Affairs, Mustapha Mkulo.
The government has challenged social security funds and their stakeholders to broaden their membership size coupled with down to earth improvement and efficiency.
Minister for Finance and Economic Affairs, Mustapha Mkulo made the appeal over the weekend in Dar es Salaam at a one-day first annual general meeting of Government Employees Provident Fund (GEPF).
He said presently only five percent of the 20million active and productive Tanzanians contributed to the social security sector.
"As of now, only about 5.0 percent of just 20million people who were capable to contribute and did so practically were members" adding such a number was too small representing only those on formal employment.
He said the majority in the informal sector was not covered under the social security fund a situation that needed timely redress through concerted efforts involving all stakeholders.
As for the GEPF and other social security funds in the country the minister counselled them to involve major stakeholders including retirees to discuss how the funds could be improved for wider coverage of membership in the country.
Minister Mkulo also said plans were under way to establish a regulatory and coordinating organization for the country's social security sector with a view to improving effectiveness and provision of quality services.
He said establishment of the the body would pave the way to more service improvements resulting in among other heartening outcomes such as broadening members coverage and funds contribution.
"We appeal and would like each and every Tanzanian to bank on and realize the worthiness of the funds" said the minister.
On her part, the GEPF Board of Trustees Chairperson, Monica Mwamunyange underlined the importance of social security funds and appealed to members to make timely contributions to the funds noting further that they were for all workers.
She said GEPF in the 2009/2010 financial would introduce a new product involving all workers in the country.
As of now she said contributions had increased from 3.8bn/= in 2004 to 10.40bn/= in June last year with four consective years of exemplay performance..
SOURCE: THE GUARDIAN
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