THE government has vowed to provide lasting solutions to challenges facing the country’s social security funds through ongoing work of preparing actuarial valuation reports for each scheme.
Actuarial valuation is a type of appraisal of a pension fund’s assets versus liabilities, using investment, economic, and demographic assumptions for the model to determine the funded status of a pension plan.
The assumptions are based on a mix of statistical studies and experienced judgment. Minister for State in the Prime Minister’s Office (Policy, Parliamentary Affairs, Labour, Employment, Youth and the Disabled), Ms Jenista Mhagama, told the National Assembly yesterday that the government was due to receive the reports.
“Once we get those reports, we will be in a better position to make appropriate decisions for coming up with permanent solutions to the problems facing the social security schemes,” Ms Mhagama stated.
The minister stated this when shedding light on progress of the government efforts to address the challenges, including shortage of funds to carry out their core duties, such as paying benefits to retirees.
She was responding to concerns raised by several lawmakers when contributing to Prime Minister Kassim Majaliwa’s budget speech tabled in Parliament on Monday this week.
The pension funds operate under the Prime Minister’s Office. Poor economic financial status of the pension funds raised concern from some legislators, who argued that the schemes were unable to pay the retirees on time.
Special-Seats MP Halima Mdee (Chadema) claimed that the pension schemes delay paying lump sum to their members who retire from their employments.
“In the past, retirees could receive their retirement benefits within six months, but nowadays it takes so long,” Ms Mdee noted when giving her contribution.
On her part, Ms Easter Bulaya asked the government to clear debts it owes the social security funds in order to make the social schemes implement their duties, including paying terminal benefits to retirees.
“Members’ contributions do not reach the social security funds, something which hinders payment of benefits to retirees,” she said.
Minister Mhagama emphasized that all challenges facing the schemes are going to be resolved upon completion of the actuarial valuation reports which will give a status of each scheme, including financial status and debts for improvements.
However, she said that the government has continued settling debts that the pension funds owe the retirees.
In this, she said over 132,670 retirees have been paid their benefits and the treasury has already disbursed 1bn/- for payment of the remaining at least 6700 retirees.
She further argued that merging the pension funds into two; National Social Security Fund (NSSF) and Public Service Social Security Fund (PSSSF), was among measures intended to address challenges facing the social security funds.