Morogoro. The Trade Union Congress of Tanzania (Tucta) says it supports the merger of social security funds into two schemes, but criticised the government’s controversial decision to review the relevant regulations.
Tucta’s response came in the wake of a public outcry after the government recently changed the formula that was previously used to calculate retirement benefits.
Under the new formula, pensioners will now receive only 25 per cent of their savings in lump sum, while the remaining 75 per cent will be paid in monthly installments.
Speaking to reporters yesterday, Tucta president Tumaini Nyamhokya said the new regulations would demoralise workers and adversely affect their performance if left unchanged.
“The new regulations are injurious to workers’ welfare. We advise the government to revert to the previous arrangement where workers were paid 50 per cent of their savings in lump sum upon their retirement,” he said.
Mr Nyamhokya also asked the government to allocate sufficient funds to social security schemes to enable them serve their members better.
Social Security Regulatory Authority (SSRA) director general Irene Isaka recently revealed that some pension funds – including the National Social Security Fund (NSSF) and Parastatal Pensions Fund (PPF) – started to apply the controversial formula back in 2014.
She assured workers that the 25 per cent formula had proven successful for both NSSF and PPF.
Ms Isaka dismissed suggestions that pension funds were broke, but admitted that the government was yet to clear massive debts it owed the schemes.
“The government has promised to pay all its debts even after the merger of social security funds,” she said.
Pressure has been mounting on the government to review the formula for calculating retirees’ benefits.
Shadow Minister for Labour, Youth and Employment Ester Bulaya (Chadema) said on Tuesday that she would table a private motion in Parliament if the government sticks to its guns.
Ms Bulaya, who is the Bunda Urban MP, told reporters in Dar es Salaam that the government should either amend the regulations or revert to the old arrangement.
Meanwhile, the ACT-Wazalendo elders’ council asked the government to continue paying retirement benefits using the old formula.
The Higher Education Workers Trade Union (THTU) also raised similar concerns recently.
THTU said the controversy surrounding the pension payment formula should be addressed as a matter of urgency.