‘Functional pension framework essential’

Source: The Herald – Breaking news.

 Advocate Jacob Mudenda

Farirai Machivenyika, Senior Reporter

A functional pension framework is essential in the country’s quest to achieve an upper-middle income society by 2030, Speaker of the National Assembly, Advocate Jacob Mudenda has said.

He said this at a workshop for parliamentarians on the State Services (Pension) Bill aimed at creating a Pension Fund for civil servants.

“As we interrogate the provisions of this Bill, let us remain guided by Vision 2030, the Government’s aspiration to transform Zimbabwe into an upper middle-income economy. A well-structured pension framework is a fundamental pillar of this vision and will ensure that no one and no place is left behind.

“Pensioners are a crucial segment of our society, and we must ensure that they are not left behind as we work towards economic transformation. In addition, the National Development Strategy 1 (NDS1) underscores the importance of social protection systems, of which pensions are an essential component. This Bill, therefore, aligns seamlessly with our national economic trajectory and reinforces our commitment to securing a dignified retirement for our public servants,” he said.

He added that legislators, had to recognise the intersection between economic growth and pension security.

“The legendary George Foreman once quipped that, “The question is not at what age I want to retire, it’s at what income.” This statement succinctly captures the financial realities of retirement planning. Hence, our role today is to ensure that pensioners retire not only with age, but with financial security that upholds their dignity and provide a meaningful retirement for all beneficiaries,” Advocate Mudenda added.

In his presentation, the Permanent Secretary in the Ministry of Public Service, Labour and Social Welfare, Mr Simon Masanga said the Pension Fund will ensure that civil service pensioners retire in dignity.

“The purpose for establishing a Pension Fund is to ensure that members enjoy a sustainable and decent standard of living in their retirement. The Fund will provide for the payment of pensions, gratuities and other benefits in respect of retirement of persons employed by the State. The creation of the Fund is also in line with the International Labour Organisation’s promulgation on social security (Minimum Standards) in old age.

The capacity of the Government to review remuneration and pension benefits has been a big challenge because of huge pension obligations. Currently the pensions office requires US$32 million and ZiG 406 million monthly to pay retired civil servants.

Mr Masanga said in 1999 Cabinet approved the establishment of a funded Defined Benefit Pension Scheme. However, due to financial constraints the establishment of the Fund could not take off. “In 2018 Cabinet redirected the establishment of the funded Defined Benefit Pension Scheme benefiting from the Actuarial Valuation that was conducted in 2012,” he said.

Currently pension benefits are paid through various Acts of Parliament and the Bill intends to amend all the provisions and consolidate them under one law. The following are the Acts of Parliament that will be amended Presidential Pension and Retirement Benefits Act, Parliamentary Pensions Act, Judges Salaries, Allowances and Pensions Act, Prisons Act, Defence Act, Police Act. Public Service Act and Health Services Act.

At present, retired civil servants receive the bulk of their pension through a pay-as-you-go scheme. The new pension fund will be building up assets, allowing pensions to be paid out of income and interest from these assets and thus assuring State pensioners of their money, regardless of the state, at any particular time, of Government finances.