Informal sector pension scheme ready

HARARE – The National Social Security Authority (Nssa) says it is ready to administer its voluntary pension scheme for the informal sector.

“Our actuaries are currently working on the model and design of the scheme,” Nssa chairperson Robin Vela said, adding that the pensions administrator aims to launch the voluntary informal scheme before the end of the first quarter of 2018.

Zimbabwe in 1989 set up a compulsory national social security pension scheme which is provided for by Nssa.

This scheme is important as it provides some form of security during retirement, invalidity or death of a breadwinner who was a member of the scheme.

Since operations by Nssa started in October 1994 there have only been two schemes: the National Pension Scheme and the Workers Compensation Insurance Fund. 

These two schemes only cover members in formal employment.

NSSA

National Social Security Authority

However, the informal sector, small to medium enterprises and domestic workers are not included.

The new scheme, which was expected to have been operational by the end of this year, will target these previously excluded groups.

According to Nssa, 72 percent of people in the informal sector do not contribute to any social security scheme. The sector makes up 70 percent of Zimbabwe’s economic activity and contributes more than 50 percent to the country’s gross domestic product, according to official statistics.

In terms of social security systems Zimbabwe is lagging behind other countries in the region and globally.

In India for example the Atal Pension Yojana is open to all Indian citizens in the 18-40 age group, whether they are formally or informally employed.

Meanwhile, Vela said the minimum retirement pension monthly pay-out was increased from $60 to $80 from October 1, 2017, in line with the organisation’s desire to deliver a liveable pension to our pensioners.

“The 33,3 percent  increase was arrived at on the recommendation of the authority’s independent actuaries who were tasked with coming up with a sustainable increment,” he said.

Vela added that Nssa’s performance has continued to improve with actual management accounts to end October showing, for the year end December 31, 2017, a projected double digit percentile increase in all the key matrices of fund size — investment income, and profitability in excess of the $100 million achieved in the prior year.

“Taking all this into consideration, the board (using its discretion) has approved a bonus payment equivalent to a 13th cheque to all pensioners with their December 2017 pension,” he said.

As part of strategies to make life easier for pensioners, Nssa successfully engaged banks for exemption of bank charges to pensioners, senior citizens who are 60 years and above.

Currently, all 14 banks that hold Nssa pensioner accounts are offering this service.