HomeBusiness DigestNRZ pension hit by $12b debt

NRZ pension hit by $12b debt

Godfrey Marawanyika

THE National Railways of Zimbabwe (NRZ) is battling to settle a $12 billion debt which has ballooned over the past three years from actuarial services. The parastatal

is currently using the defined benefit scheme, which assures a client access to his/her terminal benefits upon retirement. Other organisations are using the defined contribution scheme.

The latter largely depends on the state of the funds and these are disbursed subject to an evaluation.

Managing director of the NRZ Munesu Munodawafa confirmed that they have been battling to service the debt but blamed their problems on the defined benefit scheme.

“The problem is because of the defined benefit scheme we have been using. The debt is at least $12 billion and has been accumulating because of failure by the NRZ to service its actuarial deficit,” he said.

“We are trying to address the problem and I think by the end of this year we and the National Railways of Zimbabwe Contributory Pension Fund would have come up with a position.”

He said the NRZ was being generous to their employees as they were paying 22% towards the pension scheme per every employee instead of 15%.

“We are the only company I think that was using the defined benefit scheme in the country. Together with the NRZ Contributory Pension Fund we hope to have a solution by year end.”

The pension contributory scheme currently has 9 500 members.

Munodawafa said a few employees were failing to get their pensions timeously because of the debt crisis.

In May last year the workers took their employers to court after the NRZ failed to pay a 25% cost of living adjustment it had initially awarded.

The Railway Artisans Union president Phibian Chenyika also confirmed the problems pertaining to pensions.

“There is a problem of prioritisation of what the NRZ has to pay first,” he said.

“One of the major problems we are facing is that of inter-parastatal debt, which by the end of last year was $150 billion. Some of the institutions that owe us money are the Zimbabwe Power Company and Zimbabwe Iron and Steel Company.”

He said a plan had since been put in place for the union and management to make $1 billion monthly payments to offset the debt.

The Confederation of Zimbabwe Industries (CZI) has over the past two years been seeking ways to mobilise resources for the repair of fast deteriorating railways infrastructure.

CZI acting chief executive officer Farai Zizhou said discussions were continuing with NRZ officials to find a lasting solution to the parastatal’s infrastructural problems.

“The discussions are still continuing. At this moment nothing has been done beside agreeing to finance the refurbishment of rail wagons,” he said.

Many industries that rely on the NRZ for transportation of goods have been failing to move their various products because of logistical problems at the organisation.

This has mainly been attributable to the shortage of foreign currency to buy spare parts to repair and service equipment, shortage of wagons and locomotives as well as diesel fuel.

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