Sheria mpya ya mafao ya wafanyakazi haikuzingatia mazingira na mikataba ya ajira

August 6, 2012 § Leave a comment

Social Security Regulatory Authority (SSRA) has recently been formed in Tanzania to regulate functions and conducts of social security fund schemes in Tanzania. As a result a law was passed in April 2012 to review the conduct of the funds including restricting early withdraw of members money until when they reach their voluntary or compulsory retirement ages, i.e. 55yrs and 65yrs. Here are my views on how the new law did not consider the diverse employment terms under which those employed work in. The implementation of the new law as it is now will seriously compromise the economic rights of employees.

The following are my views:

  1.  I think the law did not consider the nature of employment in private organizations. There is no permanent employment in a similar arrangements like in government or public sector where people are permanently employment to their retirement age. In private organizations most of the contract are short term, some for months and some for 1 – 5 years. We need to inquire more to understand and explore legal ways if any for people to withdraw their reserves once their contract expires. Otherwise it seems the law has been purposely formulated to protect those who keep the funds rather than the workers. It makes little sense for someone who works for, say 2 years, doesn’t secure another formal employment thereafter yet make them suffer for the rest of their lifetime until they reach 55.
  2. After the expiry of a fixed term employment contract it isn’t automatic that a person will secure another employment neither does the government guarantee another employment to this person immediately. There is a possibility therefore that one may not secure a formal employment qualifying him/her to continuously make savings in a pension scheme. Should this person wait until he/she is 55 to start enjoying his savings? So if you are 30 you have to wait for 25 years?
  3. Some employing firms/sectors are here for a short term for example construction, NGOs/CSOs, Mining, DFP projects etc. They’ll therefore wind up their businesses before an employer reaches his/her retirement age. There won’t be anybody to process documents for their ex-employees at the material time, the new law should consider the modus operandi of such organizations.
  4. The most discouraging thing is that government officials and politicians do have access to these funds even without being members of such schemes at the first place. Some of the social funds have invested members’ money in questionable projects mostly influenced by political leaders rather than factors which would financially benefit the funds and consequently the members. There is no clear trade off benefits for workers to say yes we can forgo withdrawing money now for such and such benefits in shorter, medium and longer terms. This isn’t clear at all. It is said that SSRA will come up with a way workers can use their reserve as collateral to the commercial banks for loans. The question is, why didn’t that come in the same framework of the new law?
  5. We have noticed in recent and past times that the pension scheme parastatals (NSSF, PPF, LGPF etc) are not exercising due diligence in investing these monies. Some politicians and influential government officials are heard to have taken soft loans from these organizations despite the fact that they are not members to the respective schemes. There isn’t a careful vetting system before a particular project is adopted to ensure risks and pensioners interests are taken into consideration. The conduct/governance of these organizations have been questioned at many occasions. Even the previous law gave these funds almost exclusive powers to do anything with pensioners money. Employees of these schemes (NSSF, PPF etc.) are given loans of up to more than shs 80million yet it is not clear as to how an individual pensioner can access loan from his/her respective savings.
  6. Let us be realistic, on average how much money does the member have in these social security funds? Will the amount provide enough security for a commercial bank to issue a loan for a decent residential house? Banks give loans to make profit through interest, what business plan will the early retired employee give to the bank to justify giving him/her money? Interesting to understand how SSRA or the new law will broker this deal!
  7. How much (in %age) interest will members’ fund get at the 55th year or 65th year? What benefit do members get out of the gigantic investments made by their respective funds? How does the law protect the members from their funds being misused or invested in white elephant projects? How does the law prevent interference from politicians? The stake of these funds belong to the members/workers, how does the law make the CEOs of these schemes accountable to the holders of these funds?
  8. Protecting workers interest: TheDirector General of SSRA has alluded  that the government concern is to protect workers’ interest. In normal terms interest means something likable to the concerned person. I am not sure what SSRA says to be an interest is really of interest to workers. There was no mutual consultations before to really ascertain what are the matters of interest to the workers as far as the conduct of pension schemes is concerned. The pretext/basis/premises of forming this law seem not to be genuine as those us whom the law purport to protect our interest are not happy.
  9. My last point is on the overall governance of the schemes: The conduct/governance of the pension funds have been questioned at many occasions. I think even the previous law gave these funds almost exclusive powers to do anything with pensioners money without seamless accountability. How can for example the CEO of NSSF, PPF, LGPF, etc. be responsible to those who keep their money there? Which authority should appoint them to ensure independence and professionalism is promoted in day to day running of the funds? How should politicians and government officials keep their hands off and avoid interfering with the conducts of these organizations?

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