Source: Govt clears NSSA arrears | The Herald March 7, 2017
GOVERNMENT has issued Treasury Bills worth $181 million to the National Social Security Authority to clear its arrears from unremitted pension contributions for civil servants.
From September 2013 to October 2016, the Government, while it remitted employees’ portion of deducted contributions, fell behind in remitting the employer’s contributions.
This resulted in the Government accumulating arrears of $180,9 million as at December 31 last year.
“The Government cleared all its arrears, calculated at 7 percent contributory rate and insurable earnings ceiling of $700 by the issuance of Treasury Bills worth $180,9 million with a tenure of seven years and a coupon rate of 5 percent per annum. NSSA, as a long term investor, can afford to hold these TBs to maturity,” said NSSA.
“The NSSA Board is also delighted to have delivered on its mission to achieve full recovery of its long standing debtor book with Government, which liquidates and enhances the Authority’s balance sheet enabling NSSA to deploy the same funds to alternative investment income generative activities.”
Since June 2013, the Government had been lagging behind in adjusting contributions for state employees from 6 percent to 7 percent and earnings ceiling from $200 to $700 per Statutory Instrument 61 of 2013.
The Government has since now adjusted the contributory rate for state employees from 6 percent to 7 percent and maximum insurable earnings ceiling from $200 to $700.
NSSA said the clearance of contribution arrears by Government has an immediate positive effect on retired civil servants as those who retired earning more than $200 will now have their pensions adjusted upwards to accommodate the revised contributory rate and their actual earnings up to the earnings ceiling of $700 from $200.
On the investments front, the interest income from the boosted TBs portfolio will contribute to improved liquidity of the schemes. Increased compliance by all employers contributes to the stability and viability of the schemes which obviate the need to frequently increase contributory rates when review of benefits levels become due.