28 December 2018

Tanzania: Relief for Retirees As JPM Decides Against New Benefits Formula

President John Magufuli has put the retirees' benefit saga to rest by ordering that the formula used to calculate retirement benefits before the merger of social security funds in the country be used until 2023.

In this transition period, the President says, the government will closely monitor the performance of funds to avoid previous mistakes, including injection of workers' reserves to "white elephant" projects.

The President made the decision today, Friday, at a meeting held at State House in Dar es Salaam, after hearing representatives' opinions from the Trade Union Congress of Tanzania (TUCTA), Social Security Funds, regulator and government officials and other stakeholders regarding the newly introduced formula to calculate retirement benefits.

The Head of State insisted that retirement is not a sin instead "it's a respect" and retired workers should feel honored through their benefits.

He tasked government officials and Social Security Regulatory Authority to work during the given transition period by formulating the best formula which will replace the existing one, which requires retirees to be paid 50 per cent in lump sum, while the rest in monthly installments.

However, the President said the government has settled 1.2trn/- bill to social security funds. Under the new formula, pensioners were to receive 25 per cent of their savings in lump sum while the remaining 75 per cent was to be paid on a monthly basis.

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