ZAPFM welcomes move to exempt benefits from tax

ZAPFM welcomes move to exempt benefits from tax
By Fridah Zinyama
Tue 27 Apr. 2010, 09:30 CAT

THE Zambia Association of Pension Fund Managers (ZAPFM) has welcomed the recent resolution by the National Constitutional Conference to exempt pension, gratuity and retrenchments payments from tax. The total value of Pension Funds that are managed by ZAPFM are in excess of K2.1 trillion.

The ZAPFM over the last decade has been making submissions to the Ministry of Finance as part of its annual budget submission to exempt payment of this nature from tax to offer relief to pensioners, retrenchees and workers on contractual employment.

In a statement, ZAPFM treasurer Bryson Hamanzuka urge the of finance ministry in the next budget preparation process to consider increasing the threshold of the deductible limit for tax on amounts employees contribute to pension schemes.

“Currently, the tax deductible amount for pension contribution stands at the lower of 15 per cent or K155, 000 per month,” he stated.

Hamanzuka stated that the government should therefore consider revising the threshold upwards to a sustainable amount of lower than 15 per cent or K1 million.

“Further aligning with regional and international practices, government should exempt all incomes and earnings of pension schemes from all forms of tax,” he stated. “Zambia is one of the few countries that tax some earnings on pension funds.”

Hamanzuka said the decision by the NCC would encourage many more Zambian workers to join pension schemes, in the process securing their retirement. Hence helping government in meeting the social security benchmarks in national development.

“Also the funds held by pension funds will grow as a result of increased membership and these funds could be used as a source of economic development in the country as is the case in other countries where pension schemes play a pivotal role in development in infrastructure and capital markets,” he stated.

Hamanzuka encouraged Zambian workers to develop a saving culture now that the enabling environment was being created by appropriate pieces of legislation.