VP’s call on pension vital
TANZANIA: PENSION fund investments are receiving attention from many people, specifically beneficiaries, their families, relatives and friends.
A pension fund, also known as a superannuation fund in some countries, is any programme, fund, or scheme that provides retirement income.
Yet, the sense for governance of the investments has been growing, in line with the feeling for corporate governance issues in general. Although the micro perspective on investment governance prevails, the topic is often broadly addressed, such as in the best practice principles.
On Friday, Vice-President, Dr Philip Mpango was quoted as urging caution on pension investments, calling on social security institutions across Africa to ensure that members’ contributions remain adequate to meet the core objectives of social protection, despite the growing trend of investing the funds in infrastructure development.
The VP said that although investment in infrastructure can play a role in driving national development, it is important to maintain a balance so that social security funds continue to provide protection against economic and social shocks and support poverty reduction efforts.
In a lifetime, one expects to retire from whatever profession one has chosen for sustenance. To be able to retire, one must plan and save to enjoy the benefits of retirement.
Pension funds are investment pools that pay for workers’ retirements. Either employees, employers pay for funds, or both. When paid by employers’ funds, the funds are invested on the employee’s behalf and the earnings generated on investment are considered income to the employee upon retirement.
A worker can also voluntarily contribute part of their income to an investment plan to help fund retirement. Retirement plans are a valuable benefit that impacts employees’ present and future lives. The role of missions, plans, charters and procedures in pension fund governance is obvious. Terms such as missions, accountability, responsibility, monitoring and process are in use.
Social security institutions should shy away from engaging in infrastructure projects that lack viability, as such investments could weaken the ability of the funds to fulfil their core mandate.
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Careful evaluation is crucial when selecting projects for investment to avoid poorly conceived projects, those with excessively high costs, projects that are overly complex to manage.
Failure to conduct thorough and evidence-based feasibility studies could result in serious financial implications, including delayed payments to beneficiaries or total loss of funds invested. Let us manage well the pension funds.
