The Government has heeded calls by pensioners for greater representation, with their nominee set to be appointed to the new National Social Security Authority (NSSA) board.
NSSA’s previous board was dissolved in November, and a three-member interim board is currently overseeing the administration of the authority, with a new substantive board set to be constituted soon.
But previous boards have not had a pensioner representative as this is not a statutory requirement.
NSSA was constituted and established in terms of the NSSA Act of 1989 (Chapter 17: 04) as the statutory corporate body tasked by the Government to provide social security.
The Act empowers the Minister of Public Service, Labour and Social Welfare to announce the entity’s board.
Public Service, Labour and Social Welfare Minister Professor Paul Mavima said the pensioners’ representative will be appointed on an ex-officio basis until the Act has been amended accordingly.
“I am going to appoint a representative of the pensioners on the coming board on an ex-officio basis,” he told a meeting between NSSA and the pensioners on Wednesday.
“They will have no voting rights, but they will be part of the deliberations so that they know exactly what is happening in real time as far as the policies and programmes being planned, and therefore, be in a position to influence the direction.”
For a State pension fund, the role of the board is vital, with a broad array of key decisions, including determining actuarial assumptions, investment of fund assets, setting of benefits and other decisions that relate to the management of the fund.
Pensioners have been increasingly agitating for greater say around how their pensions are determined as macro-economic issues have eroded the value of their benefits.
Over the past few years, Zimbabwe’s macro-economic environment has not been favourable to pension owing to increased informalisation, inflationary pressures, job losses and low disposable incomes.
“This engagement, including the indication that the minister will appoint a pensioner representative on the NSSA board, is a step in the direction,” said chairperson of the NSSA Pensioners Association (Harare Chapter) Mrs Marjorie Chinyemba.
And one of the critical issues pensioners want addressed is NSSA’s recent standardisation of payouts regardless of varying contributions.
Prof Mavima said inasmuch as the one-fits-all approach was necessitated by a depreciating economy, improving macro-economic fundamentals will result in a restoration of differentiated payouts.
“The one-fits-all approach has been brought about by the rapid changes that have taken place, especially with the monetary changes of 2018, which placed us in a very difficult situation in terms of maintaining the various levels without bankrupting the scheme,” he said.
“So this is a pragmatic approach to addressing the macro-economic situation we found ourselves in. And as the economy picks up, which we have started to see, then we can go back to the differentiated payments.”
NSSA general manager Arthur Manase said the one-fits-all approach was an actuarial recommendation to ensure the sustainability of the scheme, and is line with international best practices.
In recent months, the Authority has increased the frequency of actuarial valuations of its investment portfolio as part of wider measures to ensure significant yields.
The State-run entity uses a liability-driven investment strategy that is based on the cash flows needed to fund future liabilities, and is commonly observed in the defined benefit (DB) space.
“There are guidelines regarding payment levels in different economic circumstances that are prescribed by bodies such as the International Labour Organisation (ILO). Currently, for the Zimbabwe economy, the prescribed rate would be about US$60 per month, and considering that we are coming from significant currency depreciation, we are making progress towards that threshold,” said Mr Manase.
The Government has approved staggered increases in benefits for the rest of this year, which will see the minimum benefits reaching that US$60 threshold by year-end.
The upward review in benefits will commence with a 100 percent adjustment with effect from next month.
Said Professor Mavima: “This was done bearing in mind the need to maintain the long-term sustainability of the fund. It is projected that the minimum retirement pension will increase to US$30 in July, to US$40 in October and closing the year 2021 at US$60 paid at the prevailing auction rate.”
Earlier this year, the Authority announced grocery allowances that will be paid out to members between March and June to the tune of $491 million.