Bitter harvest for Zimbabwe’s pensioners

Hobbling from his thatched ramshackle hut deep down in rural Silobela with the support of a walking stick, 64-year-old Eriya Shumba (not real name), seems to have resigned himself to fate.

Despite having fond memories of his working experience at the Zimbabwe Iron and Steel Company (Zisco) during its heydays, his experience after leaving the company is his worst nightmare whose ending seems elusive.

Mr Shumba worked for the company for 25 years, having joined as an apprentice when he was only 20 years old.

During the 25 years, he gave his all to the company, which he believed would take care of him after retirement. But abject poverty has become his portion.

He had a house in Torwood during his working years and continued to stay in it after leaving Zisco, but life in the city without a guaranteed source of income later became unbearable.

He sold the two-roomed house and relocated to Silobela, where he bought a piece of land before building a two-roomed house, which is now worn out.

Mr Shumba also used the remainder to purchase a few beasts that he uses to till the land for survival.

His wife succumbed to cancer in 2013 leaving him behind and their son, Tendai.

During his working days, Mr Shumba used to get huge sums of money being deducted from his salary as pension but now he is living in abject poverty.

Just like other pensioners from the same company, he is receiving money equivalent to US$0.25, which could easily be chewed by bank charges and transport costs to Kwekwe where he collects his pension.

The pittance pensions the pensioners are getting have left them in dire straits.

Mr Shumba lays the blame on the company, which he said chewed the pensions money instead of remitting it to the authorities.

But what could have happened to those pensions that were collected by the company?

Zisco’s pensions arrears are believed to be around US$39 million.

Company CEO Dr Farai Karonga said the company stopped deducting pensions in 2009.

“Since 2008/2009 the company was not deducting pension contributions and was not remitting both pensions as well as NSSA contributions. Essentially the pension and NSSA debt was taken over by the Government under the Debt Assumption Bill. These debts have a cut-off date of 1 January 2017,” said Dr Karonga.

He said all paperwork regarding the payment of pensions has been submitted to the Ministry of Finance and awaits action from the Government.

“Currently, there is a validation exercise by the Ministry of Finance covering pensions that is underway. Thereafter I was reliably informed that payment will be done. The necessary paperwork with regards to pensions has been submitted,” he said.

Dr Karonga said his board was pulling all stops to ensure that the pensions are paid.

“Our board is still working with all the parties to ensure that issues on pensions are resolved. It is clearly not the role of the employer but we are concerned and urgently seeking an audience with the pension funds, Ministry of Finance and all concerned to address this matter and put it to rest by settlement of all outstanding obligations,” he said.

Mr Shumba’s life of poverty and that of former Zisco workers, is not only peculiar to the company which stopped operations a decade ago due to operational challenges, but is also rampant within the industry.

According to the regulatory authority, Insurance and Pensions Commission (IPEC), sponsoring employers owe up to ZW$2.25 billion, meaning they have been deducting pension contributions but not remitting them to the pension funds.

As a result, members like Mr Shumba retire into poverty because there would be no pension benefits for them unless their companies make good the remittance of contributions.

IPEC Director for Pensions, Mr Cuthbert Munjoma said the issue of contribution arrears has been a problem since before dollarisation.

“The moment the sponsoring employer deducts contributions, they are supposed to remit these contributions to the pension fund within 14 days but some have not been doing so.

“We even have cases of companies who have not remitted contributions from before dollarisation and some since 2009 but their employees go to pension funds to claim their benefits when they retire and are told there is nothing for them because their employer was not remitting. Imagine the opportunity cost attached to that even if they make good the remittance today,” said Mr Munjoma.

He expressed optimism that the Pension and Provident Funds Bill, which is before Parliament, will bring sanity to the industry as it seeks to criminalise and hold accountable finance directors and company executives for non-remittance of pension contributions.

The legislation, if approved, is expected to restore sanity in the sector where some employers receive pension contributions but fail to remit them.

“The Bill before Parliament is going to enhance provisions to do with contribution arrears. It’s going to place personal liability on finance directors of sponsoring companies and the company itself for non-remittance,” he said.

He however, said some employers were now forthcoming as they are entering into payment agreements with pension funds so that they clear their arrears.

“We have some companies especially those that are facing viability challenges including parastatals and Government departments. We will continue working with other ministries to ensure that those arrears are cleared,” said Mr Munjoma.

Industrialist Mr Eddie Cross gave a testimony of how he worked and contributed but now receiving peanuts.

“Over my entire working life, I paid into the Old Mutual about US$1,4 million — today my pension from the Old Mutual is worth about

US$20 a month. In the past 20 years hyperinflation has wiped out the entire savings of my generation,” he said.

As a panacea, Mr Cross is of the idea of creating a functional national employment council (NEC) system.

“We should be carrying out proof of life tests on a regular basis. Zimbabwe, with its established system of national employment councils for each sector of the economy, could use these to administer similar arrangements but also by working the NEC system into NSSA. Each industrial sector would have an employment council to negotiate working conditions with their employees. These councils would be financed by a small levy on salaries but in addition each NEC would create a fund to be lodged and administered by NSSA,” he said.

According to Mr Cross, all pension funds being run by individual sectors such as the Mining Industry Pension Fund for example, would also be managed by the NEC and revenues used to support the new system. Some form of accommodation for workers who do not have NEC cover, would have to be organised and managed by NSSA.

Local authorities have been said to be leading the pack in not remitting the pensions.

Urban Councils Association of Zimbabwe (UCAZ) chairperson who is also Gweru Mayor, Councillor Josiah Makombe said his association was aware of the problem and blamed it on poor cash inflows within councils.

“We are aware that most of our councils have not been remitting what they would have collected to the pensions fund. This has been largely attributed to limited cash inflows emanating from economic challenges faced by our country. Going forward we would want a situation where councils include these pensions in their budgets and it becomes every council’s obligation to treat the pensions as wage bills. That way we might solve the problem,” said Cllr Makombe.

Labour expert Mr Japhet Moyo said there was a need to formulate structures that monitor and make follow-ups on such issues that are common across the country.

“This is a national issue and we need a holistic approach to tackle the problem. We have so many workers that are working for years but dying paupers.

“We might have the law but no one is there on policing and ensuring that it is followed,” he said.

Going forward, Mr Moyo said Parliament should make follow-ups on such issues.

“For example, the Smith Commission was tasked to investigate how some monies were rendered useless following inflation but no one bothered to look at the recommendations and the findings and let alone act on those recommendations,” he said.-chronicle.cl.zw