The Sunday Mail
The National Social Security Authority plans to raise minimum benefits to cushion pensioners from the rising cost of living, a Government official has said.
Public Service, Labour and Social Welfare Minister Dr Sekai Nzenza, told Sunday Mail Business on Wednesday that discussions with the Ministry and Finance and Economic Development were underway for an upward review of the benefits.
The NSSA Act has a provision that any review of pension benefits is done in consultations with the Treasury. Currently, principal beneficiaries are receiving minimum pay-outs of $80 per month while the surviving beneficiaries are receiving a minimum of $32.
The last increase was in October 2017.
“We are in conversation with the Treasury to review pension benefits,” said Dr Nzenza. She, however, could not disclose the proposed rate of increase.
No comment could be obtained from the Ministry of Finance and Economic Development.
Zimbabweans face economic pressure among them a crippling foreign currency shortage and rising living costs, which has eroded household spending power. The cost of living rose 42,09 percent in 2018 mainly due to a single major jump in October 2018 with the month-on-month rate now falling
“One of the most hit group is the pensioners,” economist Dr Gift Mugano said.
“So, Government must work hard to close the gap between Real Time Gross Settlement (RTGS) balances and hard notes available by closing the tap on budget deficit and reducing trade imbalances. This would require implementation of cost containment and revenue enhancement measures as well as production enhancement as enunciated in the national budget.
“This is the only way we can stabilise the economy and preserve value of money,” he added.
Actuarial analysts, however, said given the widening gap between contributors in formal employment vis a vis increasing number of people going into retirement, any reckless review may put NSSA on the brink of failure, leaving future retirees on risk of unguaranteed income stream.
The wiping out of pension fund values after dollarisation about a decade ago, resulted in many retirees falling back on NSSA for income. Pension fund values were badly eroded due to devastating hyperinflation, which soared to a record 500 billion percent in 2008 according to the International Monetary Fund as Zimbabwe tried to print its way out of budget deficits instead of introducing sound fiscal and monetary policies.
The Government wiped out hyperinflation in 2009 when it abandoned the use of the Zimbabwe dollar for a basket of foreign currencies, but mostly dominated by the U.S. dollar, leading to what is now generally called dollarisation.
“Of course, household incomes have been badly eroded but any upward review has to be carefully considered because if it is recklessly done, it may put future retirees at a disadvantage as this may leave NSSA in a position of failing to pay,” said the analyst.
Minister Nzenza said the Government would come up with “the best social protection mechanisms for our people.” As such, analysts believe it was high time NSSA should prioritise impact investments, which support social change while making money.
Impact investment, a term coined in 2007, is an approach in which, financial assets are invested with two objectives in mind; The first being to achieve a financial return while the second is to achieve a specific positive and measurable impact on society.
There is a growing trend for pension funds to strategically invest in order to achieve their corporate societal engagement strategy. Impact investment, which support social change while making a financial return has become a powerful tool for institutions such as pension funds and insurance companies and corporates.
This measurable impact is usually in the form of developmental outcomes, which communities can benefit from.
Examples of such outcomes include food security, access to affordable housing, electricity, water and sanitation, health-care and infrastructure (social and economic), which will improve the standards of living for those who are under served or have limited access these services.