NSSA to withhold pensions of defaulters
THE National Social Security Authority (NSSA) will not pay any pension to retired employees whose employers were failing to remit contributions towards the fund being administered by Government’s social security body.
Responding to a question raised by Nkulumane constituency National Assembly representative Cde Killian Sibanda during a parliamentary debate recently, on how the Ministry of Public Service, Labour and Social Service plans to safeguard unremitted pensions by companies and those invested in capital projects with very little returns, Deputy Minister Tapuwa Matangaidze said NSSA would guard against such payments.
“NSSA will always guard against paying unfunded benefits such as claims not backed by contributions. Unfunded benefits arise because the employer, after deducting contributions from the employee, did not remit them to NSSA. The latter is the case of converting employee contributions to own use by the employer,” said Dep Minister Matangaidze.
He said if contributions were not deducted at all, the claim would not be honoured. Some companies are in the habit of effecting deductions from employees’ earnings but fail to remit to the statutory bodies.
“Where the employer deducted contributions and failed to remit them depends on whether the employer is still active or closed. If the employer is still active, NSSA proceeds to process the benefit and recovers the outstanding contributions from employer,” said Dep Minister Matangaidze said.
He said where the employer has closed business and NSSA fails to receive the outstanding contributions, the benefit is processed using contribution information on file which excludes the period and amounts not remitted.
“NSSA has an investment portfolio that includes different asset classes, some yielding very high returns and others like social and economic investment aimed at promoting employment yielding relatively low to little returns. The actuaries advise NSSA on the mix of the portfolio. The advice also considers whether the scheme’s income, including investment income will be able to meet pension payments,” said Dep Minister Matangaidze.
“As a result, the way the investment portfolio is set up, which includes low return projects, will not affect pension payments because by using the “pooling system”, all contributions are invested and returns accrue to the benefit of all contributors irrespective of the level of return achieved on any particular investment”.
He said NSSA was working on an investment policy, which guarantees capital from loss and is based on actuarially guided minimum returns. This is to correct for funds being invested into capital projects with very little returns to pensioners.