Nssa, TNF oppose Bill passed by Parly

Business Reporter

THE National Social Security Authority (Nssa) and the Tripartite Negotiating Forum (TNF) have joined forces to oppose the Insurance and Pensions Commission Amendment Bill, 2024 that seeks to place the State-run pension fund under the regulatory oversight of the Insurance and Pensions Commission (Ipec).

The Bill has already been passed by Parliament and awaits presidential assent.

While the Minister of Finance, Economic Development and Investment Promotion, Professor Mthuli Ncube, intends to amend the Nssa Act to strengthen accountability, both the State-run pension fund and

TNF have warned that the move poses a “structural risk” to workers’ savings.

Nssa is a statutory body established to provide a national social insurance safety net.

Mandatory contributions from employers and employees are channelled to the statutory fund, which is under the Ministry of Public Service, Labour and Social Welfare.

Ipec is a regulatory authority for the private insurance and pensions industry.

It operates under the Ministry of Finance, Economic Development and Investment Promotion, and focuses on the financial solvency and market stability of private firms.

TNF serves as Zimbabwe’s primary forum for social dialogue, uniting the Government, business and labour.

Its mandate includes fostering consultation among these key stakeholders and providing strategic economic counsel to policymakers.

The Bill states that the reform aligns with international best practices, citing Ghana and Kenya as examples where a unified agency regulates both public and private pension schemes.

Nssa maintains that its current reporting structure under the Ministry of Public Service, Labour and Social Welfare is the most effective framework.

The authority argues that social security is a labour-market tool, not a commercial insurance product, and must remain governed by the International Labour Organisation principles.

“Social security and labour are inseparable,” says Nssa in a report.

“Reporting to the Ministry of Labour does not in any way diminish the indispensable role of other ministries whose contributions are vital to the effective governance of a national pension scheme.

“It must be acknowledged that the Ministry of Public Service, Labour and Social Welfare maintains the most direct nexus with Nssa. Nevertheless, ministries such as Finance and Justice are accorded equal stature in this collaborative framework.

“Indeed, the statutory relationship between Nssa and the Ministry of Finance is explicitly enshrined within the Nssa Act.”

Nssa notes that while the Ministry of Finance plays a vital role in national budgeting, the Ministry of Labour is best positioned to handle the direct relationship between the State and its workforce.

It contends that the “prudential oversight” offered by Ipec is unnecessary because the authority already has rigorous internal and external checks.

Unlike private insurance firms that need a third-party regulator to protect consumers, Nssa is a State-governed body with built-in safeguards.

The institution is run by a board representing the Government, workers and employers, ensuring direct accountability to those who fund it.

Nssa’s financial statements are tabled in Parliament and are audited by the Auditor-General.

Under the current Nssa Act, the Minister of Finance approves any changes to contribution rates or benefit levels, the authority argues.

Nssa is also legally required to undergo regular independent assessments to ensure it meets its long-term pension obligations. Another major concern raised by Nssa is the cost of new regulations, which it would have to pay if placed under Ipec.

Nssa argues these funds would be better spent on increasing payouts to pensioners rather than on administrative costs.

The authority points out that its current structure aligns with global best practices.

For instance, in countries such as Zambia, the United Kingdom, Germany and Brazil, social security schemes report to labour or social welfare ministries rather than financial or insurance regulators.

“Placing Nssa under the jurisdiction of Ipec would divert funds away from benefit disbursements and undermine the very objectives of social protection,” the Nssa report says.

“It would imply putting it under the Ministry of Finance and Economic Development, contrary to predominant international practice.

“The trend globally is that contributory social security programmes like the ones being administered by Nssa are labour-based and, for this reason, are invariably under the purview of ministries of labour or social welfare.”

Nssa recommends maintaining the status quo, where the Ministry of Labour provides primary oversight, while the Ministry of Finance provides technical guidance on macroeconomic issues.

In their resolutions following a technical committee meeting of the economic cluster held in Mutare last month, TNF expressed concern, claiming the Bill creates a financial windfall for Ipec at the expense of contributors.

Under the proposed Bill, pension funds would pay mandatory contributions to a new Protection Fund.
The TNF is concerned by clauses allowing unclaimed benefits to be transferred to this fund after five years, describing it as a “diversion of pension resources” away from beneficiaries.

A major grievance shared by both Nssa and the TNF is the potential loss of stakeholder voice.
The current Nssa board is tripartite, representing the Government, workers and employers.

In contrast, the proposed Ipec board lacks mandatory seats for labour or employers, leaving appointments under the total control of the Minister of Finance.

The TNF argues this violates “tripartism”, the international standard requiring those who fund the system to have an institutionalised voice in its governance.

It further criticised “indemnity” provisions that shield Ipec employees from liability, while granting them powers to criminalise administrative errors by fund managers.

The TNF expressed doubt over whether Ipec has the technical expertise to supervise an entity as large and complex as Nssa.

It noted that public confidence in private insurance remained low due to historical losses, whereas Nssa was viewed as a “last resort” safety net.