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Whinsley Masara Chronicle Reporter
THE Minister of Public Service, Labour and Social Welfare, Cde Prisca Mupfumira says the National Social Security Authority (NSSA) is not underpaying pensioners.
During a question and answer session in Parliament recently, Cde Mupfumira, through a written response submitted by Tourism and Hospitality Industry Minister Walter Mzembi, said the pay-outs that are being made are in line with the law that governs the provision of social security pensions in Zimbabwe.
The Minister said the amounts of pensions paid are defined by law using a certain formula that takes into account the insurable earnings of the contributor at retirement and the number of years contributions have been made to the scheme.
She said this implies that if the insurable earnings are low, the amounts of pensions paid out are also low.
Cde Mupfumira said while NSSA pays a minimum retirement pension of US$60, other schemes in other African countries pay minimum pension as follows: Ghana, US$52.36, Tanzania US$32.80 and Namibia US$67.
“In conclusion, NSSA is not underpaying pensioners. The levels of pensions being paid are commensurate with the formula as provided by law and in line with all other parameters such as the insurable earnings. The scheme’s benefits are defined in a way that they increase with the years of contribution and the ceiling on insurable earnings,” said Cde Mupfumira. “After contributing for 30 years, the pension will be 40 percent of one’s insurable earnings and after contributing for 40 years, the pension will be 63,3 percent of one’s insurable earnings. The pensions are low because the scheme is still fairly young. It’s important to invest part of contributions today so that future pensioners, who are current contributors, have adequate pensions when they retire.”
The minister said insurable earnings are different from the actual salary of the contributor and insurable earnings are subject to a ceiling on earnings.
She said it is necessary for the NSSA schemes to invest part of the funds contributed as these contributions are mainly from young workers who will claim in future.
“The low level of the insurable earnings ceiling has resulted in low pensions being paid to NSSA pensioners, especially those who retired between April 2010 and June 2013. For example, if someone joined the scheme at its inception in October 1994 and retired at the end of September 2012, they would have contributed for 18 years to the scheme,” Cde Mupfumira said.
“If their salary at retirement was US$1,000, their insurable earnings would only be US$200 and when calculating their pension, it is the US$200 that is used and not the US$1,000 that they earned. Using the formula that is prescribed in the law, they would be paid US$48 basing on the insurable earnings of US$200 instead of US$240 if they had contributed basing on their actual salary of US$1,000.”
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