Maravi

‘Non-remittance of pension dues creating unpaid benefits backlog’

‘Non-remittance of pension dues creating unpaid benefits backlog’
By Namatama Mundia
Thu 15 Apr. 2010, 03:30 CAT

THE Local Authorities Superannuation Fund (LASF) has said the institution has not been paying retirees their benefits on time because of non-remittance of pension contributions.

Making a submission to the parliamentary committee on economic affairs and labour chaired by Zambezi West UPND member of parliament Charles Kakoma yesterday, LASF managing director Remmy Pepala said non-remittance of pension contributions had created a backlog of unpaid benefits.

“Members who have retired have to wait before they are paid their retirement benefits. By the time they get their benefits, the value would have reduced due to effects of inflation and price increases in the commodities,” he said.

Pepala said the total amount not paid to retirees and their beneficiaries was K60.64 billion.
“As at 30th November, the total amount not paid to the retires and their beneficiaries was K60.64 billion broken down as follows: Zesco K37.84 billion, councils K19.49 billion, water companies K2.95 billion and National Housing Authority (NHA),” he said.

Pepala said associated authorities owed LASF K93.02 billion in form of un-remitted pension contributions as at November 30, 2009.

However, he said non-remittance of pension contributions still remained a challenge for the LASF.
“The current position is that associated authorities have continued to default in the remittance of members’ contributions to LASF. The persistent and debilitating liquidity problems faced by councils, particularly during the post decentralization era which commenced in 1980 has affected their ability to remit the contributions,” Pepala said.

And Pepala also submitted that LASF should be exempted from the National Pension Scheme Authority NAPSA Act if the Fund was to survive.

He also said the LASF Act should be amended to bring it in line with the current environment of social security.

Pepala expressed worry at the decline in the number of members that contributed to the fund, which stood at 9,843 as at November 30, 2009.

“The contributing membership has been declining because all new employees commencing employment on or after 1 February, 2000 are required to join the NAPSA as a basic scheme on a compulsory basis,” he said.

Pepala said this requirement of employees joining NAPSA on a compulsory basis had affected LASF in that it had not been receiving new members since February 2000.

“This provision also affects the Public Service Pensions Fund PSPF as new employees joining government service are now required under the same law to subscribe to NAPSA and not PSPF,” he said.

Pepala added that the membership for active contributing members had declined from 15,000 to 9,843 in November 2009 representing a 34 per cent reduction.

“It is projected that the Fund will have no contributing members by the year 2017 if the issue of exempting LASF from the NAPSA Act is not resolved. The long term implication of this position is that LASF has a finite lifespan and is headed for a wind up,” he said.

Pepala said currently the number of retired pensioners exceeded the number of active contributing members.

“This is a dangerous position because the social security principles require a scheme to have at least three or four active members for one retiree,” said Pepala.

Labels: CHARLES KAKOMA, LOCAL AUTHORITIES SUPERANNUATION FUND, PENSIONERS

posted by MrK @ 2:29 PM