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Does the new pensions law help workers?

The commentary, 'Did SSRA Act in workers' best interest?' published in The Citizen on 5 August 2012 was written by Uwazi Senior Analyst Rose Aiko and the Centre for Economic Prosperity's Executive Director Thomas Maqway. This article represents their personal views.

'The Social Security Laws (Amendments) (No.2) Act, 2012 has created an unprecedented buzz in the media and among workers this week.

While the law can be described as a bag of mixed blessings, the bad mix seems to have outweighed the good. Three entries in the new Act in particular beg answers as to how the Social Security Regulatory Authority (SSRA) and the Government can claim having acted in the best interests of members and would be members of pension schemes.

By quashing withdrawal benefits there is a higher risk of more people falling into poverty. It is a fact that Tanzania does not have an institutionalised or formal safety net programme for persons who are unemployed and/or lose their jobs.

We hear about food stamps or shelter for homeless in developed countries. But these things are alien to Tanzania. We also know that most people and especially those employed in the non-government sector are at best seasonally employed—on contractual terms that could be as short as six months.

This means that many persons who face prolonged unemployment after losing their jobs, rely on the benefits as their only recourse.

By quashing the right to withdrawal benefits, however, the SSRA and Government have just created conditions ripe for more workers and their families to fall deeper into poverty.

How else would these persons, when jobless, get money to put food on the table, pay their children’s school fees, meet medical expenses just to name a few. Can these needs be postponed to pensionable age?

Raising the voluntary retirement age from 50 to 55 years is a hard sell for workers; and worse still goes contrary to good practice.

To the extent that pension is to help workers during old age, we would expect that the pensionable age should arrive earlier than the life expectancy at birth (expected years of life).

This is the good practice that all well-intentioned governments should emulate. Developed countries would not dare set retirement age past life expectancy age, yet Tanzania does.

Life expectancy at birth in Tanzania in 2009 is 55 on average (males: 53 years) and (females: 58 years). By setting the voluntary retirement age at exactly expected time of death, and the compulsory retirement (60 years) 5 years past the life expectancy date of a typical Tanzanian how can the SSRA and the Government claim to have acted in the best interests of members?

Wouldn’t acting in the interests of the public, given life expectancy today, have required just the opposite: to lower the pensionable age?

How can pensioners be expected to enjoy the fruits of their labour when they are dead? Under these circumstances how can workers refuse to agree with the sentiment that someone somewhere is trying to rip off pensioners the fruits of their labour?

Another reason that makes the decision to raise the retirement age unfounded has to do with the Tanzania’s population pyramid.

There is a large workforce than the elderly and compared to developed countries such as UK and Netherlands, Tanzania can’t claim a problem of sustenance—a larger elderly population compared to the working population. What is the rationale here, if someone can tell us?

Exemptions from conditions of the Act by the President 

When it revoked the right to withdrawal benefits, the Government also introduced a new and more worrisome element in the new law: a discretionary clause, by which workers can get exemptions from the conditions of the Act by applying for it to the President. There are two reasons to worry about this section:

First, it creates a situation that makes it difficult for workers to get their rights: how many can reasonably access legal assistance and petition the President for exemption in a typical year?

Second, it unnecessarily extends operational responsibilities that should be handled by the SSRA to the Head of the State.

Has this been done purposely to make it difficult for workers to use the option? How many requests can the President be expected to handle in a year? Hasn’t He better things to do than involve himself in processing workers benefits? And how do workers in the private sector especially get recourse to this channel?'

View the article here.

Read more: governance

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