Online Reporter
IN what might be the biggest domestic savings mobilisation tool yet, the National Social Security Authority plans to start offering pension cover to the informal sector by year-end, and the diaspora community further down the road, a senior official of the authority has said.
Authority Director for Benefits, Actuarial and Schemes, Mr Shepard Mperi, said cover of the two sectors, to be rolled out in phases, is expected by far to dwarf, in terms of savings mobilised, NSSA’s current collections in pension cover from salaried formal sector employees.
He said the planned pension cover of the diaspora and informal sectors followed extensive research and feasibility studies undertaken at home and abroad under the technical guidance of the International Labour Organisation (ILO) and other consulting partners.
“We are now on the verge of accepting informal sector contributions (to the pension fund). We realised that the informal sector is huge and is not covered by social security,” Mr Mperi said.
“We have done thorough feasibility studies on this with technical assistance from ILO, and are benchmarking our cover against similar schemes in Ghana, Rwanda, Uganda, Uruguay and other countries in Latin America that we studied,” he said.
Mr Mperi estimated the potential informal sector market needing pension cover at over four million, more than twice bigger than the 1.3 million formal sector employee pool NSSA currently exclusively taps from.
He said, combined with the diaspora market, also estimated in millions, the two sectors — when fully brought on board — will be a huge source of savings for national development.
“We are now designing and costing various (pension) schemes that could be offered to the informal sector and diaspora, and we might roll out a pilot scheme at the end of the year,” Mr Mperi said.
He said this will be rolled out in phases, and in the initial stages NSSA will work closely with various informal sector business associations, and organisations such as banks currently dealing with the diaspora, to build up confidence, and subsequently uptake.
The schemes on offer will be varied, mainly based on client affordability, and incentives such as loans for contributors will form part of the package to spur uptake.
Mr Mperi said the bigger savings cake expected will give NSSA increased financial muscle to contribute to national development in various areas, such as road and dam construction, power generation and housing delivery.
The authority is a major player in infrastructure development across many sectors, some of which — such as energy — anchor the entire economy and require huge investment.
“With a bigger purse, NSSA would be able to play an even bigger role in national development to ensure the Government’s goal of bringing development to every corner of the country is met, and no place is left behind in terms of development,” Mr Mperi said.
In the wake of a shrinking formal sector base of the economy, NSSA’s pension cover for the informal and diaspora sectors is not only a timely social safety net for a large segment of the population, but will also go a long way in addressing shortages of long-term capital on affordable terms. – New Ziana
