Pension funds impoverish contributors

IT has been three weeks since the deadline passed for registration for the Zimbabwe School Examinations Council (Zimsec) Ordinary Level examinations for November and Gift Sibanda will not be among the thousands of pupils sitting for those exams after his mother, a retrenchee, failed to raise the fees.

Hazel Ndebele

Sixteen-year-old Gift is the eldest of four children, whose family is struggling to make ends meet after their widowed mother, Faith Sibanda, was retrenched in 2010 and has not received a cent in pension savings since she was laid off.

Gift has now dropped out of school after he failed to register for the ‘O’ level exams. He needed US$120 to enable him to sit for eight subjects.

A dejected Faith (39) said: “As the June 12 deadline approached for the registration for the Zimsec November examinations, I could no longer bear seeing my son leave home for school as the thought of not being able to pay for his examination fees depressed me.

“I had no choice but to have him drop out of school. In addition to the exam fees, I also owed the school more than US$100 in school fees and levies. It’s very painful to watch your child, an ‘A’ student, having to drop out of school because of lack of funds.”

Faith worked as a cashier at a Bulawayo City Council-owned beerhall in Bulawayo’s high-density suburb of Pumula from 2002. She, however, lost her job in 2010 when the local authority was forced to close down a number of its “beer gardens” due to high utility bills and a decline in production by Ingwebu, a council-owned entity which brews opaque beer.

“If only they had paid me my pension my son would be able to write his exams. I am supposed to get a lumpsum of US$2 500 from LAPF (Local Authorities Pension Fund) and thereafter I am supposed to receive monthly pay-outs,” said Faith from her Magwegwe home in Bulawayo where she lives with her four children.

“However, efforts to get the money or even an explanation from the organisation have not yielded anything.”
Faith has been living on handouts from her relatives who are also struggling due to economic hardships. “We basically live on handouts and money which we collect from a room we are renting out, but it is not enough as we use the same money to pay the bills. I am considering relocating to Harare where my aunt lives with the hope of finding a job there,” she said.

“What hurts me the most is that I cannot provide the basic right of education to my children and yet I was making contributions religiously when I was still employed. I hope to get a job and maybe Gift can sit for his exams next year in June.”

Sibanda is just one of the many retrenchees and retirees around the country who are struggling to access their pensions after they are retrenched or retire.

Retired pensioners who are under the National Social Security Authority pension scheme get US$60 per month which is not adequate enough to sustain lives of beneficiaries.

At least 7 000 employees were retrenched last year, with more than 50 companies letting go of their workers amid operational challenges epitomised by a swingeing liquidity crunch.

According to Finance minister Patrick Chinamasa in his budget statement last year in November, more than 4 600 companies had closed shop since 2011, resulting in more than 55 400 people losing jobs.

Companies blame the liquidity challenges facing the country for non-remittance to pension funds.
The LAPF, which has more than 30 000 pensioners on its roll, has been failing to make payments, leading to most councils pensioners wallowing in abject poverty.

The organisation is one of the worst affected pension funds in the country, as it is owed more than US$100 million by local authorities, who are failing to remit contributions.

In its 2015 pensioner newsletter, LAPF wrote: “Regrettably, the fund’s financial condition remains extremely worrisome. Cash receipts into the fund continue to be insufficient to cover all the fund’s obligations on a regular basis.

“This is against the liquidity challenges being encountered by member local authorities that have constrained them from remitting monthly contributions on time which has starved the fund of critical cash resources and the build-up of contribution arrears at well over US$100 million.”

LAPF admitted failure to paying out pensions, saying the economic downturn has affected cash-flows from investment activities, such as property rentals.

“Although concerted efforts are being made to rectify the situation, we do not envisage an improvement in the near future. We sincerely apologise for the inconveniences and financial hardships being caused to our pensioners by the erratic and belated payment of monthly pensions,” read the newsletter.

However, some LAPF workers who spoke to this paper on condition of anonymity said the organisation was riddled with corruption.

“The person who told you that they have not yet received their pension for five years is telling the truth. What happens here is that if you want to speed up the process, you have to pay a bribe,” said an LAPF source.
“Yes, we have cash-flow problems, but members here get bribed by as much as US$500 to help an individual get his or her returns.”

The plight of pensioners continues to worsen due to the unrelenting harsh economic situation prevailing in the country.

Retrenchments, reduction of salaries through revised work schedules, low and staggered salaries and wages, eroded pensions and delays in salary payments have become the order of the day as companies battle to stay afloat.
Last week, the cash-strapped government announced that it had moved pay dates for pensioners from June 30 to July 7.

Pensioners used to receive their monthly salaries around 20th of each month before the dates were then pushed to between 27th and 30th.

Economist John Robertson said pensioners have joined the ranks of people who are reeling from economic adversities which he says are due to the government’s poor policies. “Pensioners are finding themselves in the informal sector because pension organisations are either failing to pay or paying little which cannot sustain one’s needs. This month Old Mutual advised its pensioners that it is reducing the amounts of pay-outs as a means of survival,” said Robertson.

“Pension organisations invest in three ways which is share market, money market and property market and yet all these are shrinking. Collapse of the stock exchange does not make life any easier for these companies, the money market has become the most important source of money and yet it is the most dangerous as it is risky to invest in due to many incidents where people lose money. The asset base is very disappointing as rental income has decreased and property prices have gone down.”

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