TUCTA pursues review of lump sum pension, proposes 40 per cent

TRADE Union’s Congress of Tanzania (TUCTA) yesterday admitted to have been involved in introduction of the new system of calculating lump sum pensions.

The trade union apex body spoke after a long silence on the ongoing debate on pension calculations, noting that there is room for getting back to the table for negotiation.

“We are seeking an audience with Minister Jenista Mhagama (Minister of State in the Prime Minister’s Office, Policy, Parliamentary Affairs, Labour, Employment, Youth and Disabled) to request for an increase in the lump sum pension to at least 40 per cent,” TUCTA Chairman Tumaini Nyamhokya said here.

He was briefing the media on a two-day meeting of the union’s executive committee that has the issue of new regulations dominating its discussions.

The regulations under the new Public Service Social Security Fund Act, 2018 have harmonised the pension calculations, with all members now receiving 25 per cent of their total contributions on retirement.

Effective 2014, only members with former NSSF and PPF schemes were being paid their lump sum retirement pensions under the 25 per cent system, with the remaining 75 per cent paid as monthly pension.

The new law, which came into effect on August 1, 2018, has also merged five pension funds into two—the Public Service Social Security Fund (PSSSF) and National Social Security Fund (NSSF).

Shedding light on how the 25 per cent was reached and TUCTA participation in the process, Mr Nyamhokya said introduction of the system went through proper legal procedures, but the union had different suggestion, proposing 50 per cent of membership contributions as lump sum pension upon retirement.

He said TUCTA, Association of Tanzania Employers were effectively engaged in the writing of the new regulations by the Social Security Regulatory Authority (SSRA) as major stakeholders under tripartite system.

The union participated to about eight stakeholders’ meetings to draft the regulations. “Our participation had special respect and treatment,” he said.

During the stakeholders meetings, he said, majority participants from ATE and SSRA supported the 25 per cent lump sum pension as opposed to 50 per cent.

The process then proceeded to the next stage of presenting the matter before the Labour, Economic and Social Council (LESCO) which had four representatives from each of the three parties and experts from the Prime Minister’s Office, Policy, Parliamentary Affairs, Labour, Employment, Youth and Disabled.

The proposal for the 50 per cent lump sum pension was dropped during the LESCO meeting, said Mr Nyamhokya.

According to the law, LESCO meeting is the final adviser to the minister responsible for employment related issues during the discussions and crafting the law.

“Despite the decision reached, we have followed up on the matter to the minister, and she has promised to work on our concerns...our aim is to have discussions to avoid conflicts between the government and employees,” he said.

The SSRA clarified the matter recently, arguing that the current lump sum pension is calculated using the formula, which NSSF and PPF have been applying since 2014.

SSRA’s Director General Dr Irene Isaka said in 2014 it was agreed that members of the PSPF and LAPF who constitute 20 per cent of all members of social security schemes in the country also be paid 25 per cent.

She further explained that receipt of 25 per cent of pension contributions in lump sum, boosts the remaining monthly pension to the retiree to 75 per cent.

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Author: BERNARD LUGONGO in Morogoro

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