Heavy cuts for early pensions withdrawal.

SSRA Director General Irene Isaka.

The Social Security Regulatory Authority (SSRA) has said that 3.6 percent of potential earnings will be deducted from workers’ pensions who opt to withdraw before retirement age.

 

 SSRA Director General Irene Isaka said in a statement that workers’ pension will be deducted for 0.3 per cent each month and thus equal 3.6 per year for those who opt to drop before the retirement time and not 18 per cent as it has been claimed.

 

The percentage will be calculated for all the remaining years before attaining age of 60 years, which means that for a worker opting to withdraw at the age of 58 the deduction will be 7.2 percent, “which is different with the one who withdraws at the age of 59 whose deduction will be 3.6 percent while who withdraws with 57 the deduction will be 10.8 per cent.”

 

Thus for one who withdraws at the age of 55 the deduction will be 18 per cent for all the five years.

 

SSRA explained that before the regulations workers who opted to withdraw obtained 28 per cent more as compared to who withdraw on retiring on time.

 

The director general claimed that they involved all stakeholders including the government, employers and trade unions when making the new regulation, something that many union quarters dispute.

 

“The fact is that section 13 of the Pension Benefits (Harmonization) Rules of 2014 provides for a discount of 0.3 per cent from the benefits of a member who retired between the ages of 55-59, while the discount ends when he or she reaches 60 years,” said Ms Isaka.

 

Besides introducing the new pension calculation formula, she also unveiled the new rules.

 

Ms Isaka noted that all new members who joined the scheme from last July 2014 will be managed under the new benefits formula, but this applies only to members of the Local Authorities Pensions Fund (LAPF) and the Public Sector Pensions Fund (PSPF). 

 

For members of other social security funds including the Parastatals Pensions Fund (PPF), the National Social Security Fund (NSSF) and the Government Employees Provident Fund (GEPF) the new regulations will be applied regardless of when they joined. 

 

Isaka admitted the mandatory retirement age is 60, but there is room for employees to retire at 55 which the authority is now permitting the funds to deduct heavily those who use that option.

 

However the Trade Union Congress of Tanzania (TUCTA) has criticised the regulations on the grounds that the formula disadvantages some retirees, who will receive reduced pensions.

 

Tucta President Gratian Mukoba has rejected the new regulation on terminal benefits calculation on the grounds that it is unconstitutional and reduces pension benefits by 50 per cent.

 

Mukoba said that the proposed formula would cut public servants’ pensions by half, marking a significant change from the current legislation, where teachers receive generous payments from pension funds.

 

Ubungo MP John Mnyika told this paper that the government is creating a new conflict with workers in withdrawal of benefits as it did earlier.

 

He said the Minister for Labor and Employment should speak up immediately over the ongoing challenges before it causes a generalized workers’ strike.

 

Mnyika called upon for the government and the Social Services Committee of the National Assembly to sit together with workers purposely for addressing the challenge instead of waiting until crisis breaks out.

 

The chairman of the Civic United Front, Professor Ibrahim Lipumba told the SSRA to stop the implementation of the regulation until they reach a consensus with workers.

 

In August last year the Labour ministry launched the new formula that will see pensions shoot up to 72.5 percent from the current 60 to 67 percent.

 

The minister said under the social security schemes’ pensions harmonisation rules, some of the changes   made include indexation of pension benefits to enable retired people to live decent lives as per Section 32 (a) of the relevant legislation, law number 8 of 2008.