Andrew
Online Reporter
Government has approved a recommendation from the National Social Security Authority (NSSA) to peg benefits pay-outs to the foreign currency auction rate.
The new policy is effective from January 1, 2022.
Current minimum pension payments are pegged at the equivalent of US$60 and US$70 for the Pension and Other Benefits Scheme (POBS) and the Accident Prevention and Workers Compensation Scheme (APWCS), respectively.
NSSA general manager Mr Arthur Manase said although the compulsory pension fund increased benefits levels to the desired US dollar equivalent in January as it had promised, the amounts that were paid fell short due to disparities in the rate that was used on conversion against that which prevailed on payment.
“The Authority recommended increases in all pensions in payment for the POBS and APWCS schemes of 21 percent and 20 percent respectively effective January 1, 2022, while it was recommended that the minimum pension be increased to $6 000 and $7 000 for the POBS and APWCS respectively. The purpose of the increase was to equate the minimum pension for the POBS and APWCS to at least US$60 and US$70 respectively at the official ZWL-USD exchange rate,” said Mr Manase.
“At the time of the proposal, the USD-ZWL exchange rate was averaging 97 following a long period of stability at around 88 for the greater part of 2021. In this regard, the minimums that we paid in January fell short of the promised US$60 and US$70 at the auction rate.”
He said the official USD-ZWL exchange rate was at 1:113 as of January 18, 2022, which eroded minimum pay-outs to the equivalent of US$53 and US$63 for POBS and APWCS in that order.
Based on this, the minimum level for POBS has been revised to $6 900, which is an adjustment of 15 percent, with those earning above the minimum enjoying a similar increment effective of January 1, 2022.
The APWCS minimum has been increased to $8 050 and those earning above that threshold enjoying a 15 percent increment effective January 1, 2022.
Mr Manase said the shortfalls from the January payroll would be honoured in February, adding that a self-adjusting system would now be implemented to provide a lasting solution.
“As a result of these disparities, the minister (of Public Service, Labour and Social Welfare) authorised the implementation of a self-adjusting mechanism that will see minimum benefits move in line with the official USD-ZWL exchange rate as published by the RBZ, provided sufficient contributions and investment income is earned to guarantee ongoing liquidity and sustainability of the fund,” he said.
Tinaye Agere
Online Reporter