23 July 2014

Tanzania: Unions Oppose Cut in Retirement Payouts

TANZANIA Teachers Union (TTU) and Tanzania High Learning Institutes Trade Union (THTU) have expressed discontent over the Social Security Regulatory Authority's (SSRA) recommendation to improve pension funds in the country by reducing the current amounts of retirement payments.

Addressing a press conference on Tuesday in Dar es Salaam, TTU president, Mr Cratian Mukoba, who was in the company of THTU Chairman, Mr Yusuph Singo, said the two unions did not support some of the SSRA recommendations, noting that the current retirement payments enabled pensioners to tackle personal commitments to enable them live reasonably comfortable.

He said some of the recommendations the unions were opposed to include reducing lump sum retirement payments from 50 per cent to 33.3 per cent for the Public Service Pension Fund (PSPF) and the Local Authorities Pension Fund (LAPF).

"Reducing the amount without having proper strategies to provide loans to the pensioners will be catastrophic and this we do not agree with at all," he explained.

Other recommendations which the two unions do not support are using a threeyear- salary average instead of the last salary to calculate the retirement payments and reducing the life expectancy age after retirement from 15.5 to 12.5.

"SSRA has not done any research to find out how long retirees live before they die. We suggest that a survey should be conducted to determine this.

We believe this recommendation is only meant to reduce the lump sum and monthly retirement payments," Mr Mukoba explained.

Mr Mukoba said supporting any recommendation to improve pension funds in the country by reducing retirement payments was going against human rights and would plunge retirees into abject poverty.

"For a long time workers in the country have been complaining about small salaries due to high income tax rates and small retirement payments owing to the fact that pension funds have loaned a lot of money to the government without receiving any repayments and the investments are therefore not beneficial to the pensioners," he explained.

Citing an example, he said while the government was yet to pay to PSPF 4.04trl/- as contributions of those who were members in 1999, it had continued borrowing from the pension fund for development projects and now the loans totalled 787bn/-.

"In any normal circumstances it is difficult for members to understand why the PSPF board and management agreed to hand out the loans when the government still owes the fund a lot of money," he wondered.

He said the two union agreed with SSRA that some of the pension funds were in bad shape financially and needed quick assistance to recover.

"But we do not agree with some of their recommendations given by the government through SSRA," he noted. Mr Singo explained that the current retirement payments were small compared to the high cost of living, stressing that the unions were quite shocked by the decision taken by SSRA.

SSRA Public Relations Officer, Ms Sara Kibonde, told the 'Daily News' yesterday that all recommendations were just proposals, stressing that no decision had yet been made.

"We would have informed the public through the media, but there are no decisions yet and I cannot go into details about each proposal made," she explained.

She added that normally SSRA involves all the stakeholders in such matters before it forwards the proposals to the government.

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