14 February 2013

Tanzania: Pension Funds At the Crossroads

Arusha — CONCERN has been raised that Tanzania will likely face a major crisis in form of the influx of pensioners in fifty years as more than 70 per cent of the country's population will be retired.

Several speakers at the third forum of National Social Security Fund (NSSF) members here cautioned on the influx, opining that Tanzania is fast becoming a nation of young people with more than half of the population on retirement gear and hence 'the retiree boom' and more pressure on the pension funds.

One of them, Kigoma North MP Zitto Kabwe reminded the meeting that at the moment Tanzania was a young nation. "More than half of the country's 45 million people is made up of youths aged below 17 years," pointed Mr Kabwe, adding that over 70 per cent of Tanzanians are young people aged less than 29 years.

It was also revealed during the forum that in 50 years time or essentially by 2063, where the country's population is expected to double to more than 100 million and should 70 million "senior" citizens be demanding their pensions then all the schemes in the country will burst.

"The government will be compelled to rescue the situation by borrowing money from collected revenues to offset the shortage of funds, but even that may not help the cause," warned Mr Kabwe, who is the former chairman of the defunct Parliamentary Parastatal Organizations Accounting Committee (POAC) while contributing to the issue of "Withdrawal Benefits" a system which he vehemently opposed.

"Encouraging withdrawal benefits is the surest way to annihilate pension funds in the country," he said, adding that the nation of 45 million people has only one million citizens contributing to pension schemes.

In response, the NSSF Director General, Dr Ramadhani Dau, told the forum that to curb the measly number of pension scheme members, the National Social Security Fund will soon launch a three-year, strategic plan which will include efforts to establish ventures that will create jobs.

"Limited contribution to funds is caused by massive unemployment rates and it is upon us to ensure that jobs are created and majority of Tanzanians get employed so that they may become members of our schemes," Dr Dau said.

On the other hand, the NSSF Regional Manager for Government Departments and Embassies, Ms Rehema Chuma, said there were also efforts to harmonize terminal benefits and smooth out migration between pension schemes. "This will help solve the problem of some schemes lacking or having few members and thus making each Tanzanian feel free to move from one scheme to another, without risking losing or having their payments reduced," said Ms Chuma.

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