HomeLocal NewsNssa mismanagement: Pensioners hit hardest

Nssa mismanagement: Pensioners hit hardest

Zimbabwe’s national social security agency, National Social Security Authority (Nssa), has been dogged by gross mismanagement of funds and imprudent investment decisions that have prejudiced thousands of pensioners, a recent audit report has revealed.

Hazel Ndebele

Nssa has recently been under fire from struggling pensioners and lawmakers who felt that its meagre payouts to beneficiaries were below the poverty datum line despite investment in ailing banks, the equities market and property.


According to a report carried by an international audit firm Deloitte Advisory Services, dated October 30, Nssa has been reeling from losses stemming from loss-making deals that have eaten into the organisation’s US$1,2 billion fund.
The report says that lack of oversight after the term of the previous board lapsed resulted in management taking decisions that saw the authority sinking at a time contributions have been dwindling due to massive job cuts.

Nssa had operated without a board from the time the term of the last one expired in 2013 until Public Service minister Prisca Mupfumira on July 10 this year appointed a new board led by Robin Vela.

The report, exclusively seen by the Independent, reveals a loss of US$11,4 million with closed financial institutions, impairement of investments of US$13 million, executives paying themselves basic salaries plus benefits of more than US$6 000 per month — a figure exceeding a government cap announced last year.

A gross separation award of US$624 510 was paid to a former chief internal auditor after his contract was terminated by mutual consent with Nssa without a written approval by the board.

The authority also allowed board fees accruing to executives sitting on related companies’ boards to be paid directly to them when such fees used to be paid to Nssa for onward distribution to the executives.

“The policy should also not create conflict of interest around directors’ fees and investments and must have clear parameters on who qualifies to sit on such boards,” the report says.

The report also says surpluses emanating from the Workers Compensation Insurance Fund (WCIF), also known as the Accident Prevention Scheme, are too high. “Surpluses will continue to increase while employers are finding it difficult to pay premiums and/or the beneficiaries,” the report says. “The higher the accumulated fund in comparison with liabilities, the more tempting it will become to abuse the funds.”

The report also notes that during the period under review, there was no reliable data for the National Pension Scheme (NPS). Unreliable data, it says, may lead to wrong recommendations being made in actuarial valuations, wrong contributions and wrong benefits being paid by Nssa, the report says.

The report further says since dollarisation in 2009, operating expenses, including staff costs, have increased at a faster rate than Nssa’s income and inflation.

Between 2009 and 2014, operating expenses relative to income were contributions and premiums(79%), investment income (353%), total income(92%), claims and benefits (652%), operating expenses (167%) and staff costs (116%).

“Nssa is a ‘cash-rich’ organisation with surpluses on the two schemes it currently manages, therefore it has been able to afford the operating expenses, however, this may be at the expense of beneficiaries whose benefits are perceived to be low,” the report says.

As at June 30 2015, the minimum level of benefits were at US$60 for old age pension, US$30 for invalidity pension, survivor’s pension US$45 worker pension US$15 child and dependent pension, as well as US$300 for funeral grant.

Another key issue noted in the report is the missing of key documentation in individual investment files such as copies of deed of transfers and share certificates, agreements of sale, proposal from sellers and analysis done, as well as recommendations at various levels.

The report says non-performing investments include Africom, Turnal, StarAfrica, Dubury investments and capital invested in closed banks. Investment of US$30 million in Capital Bank fully impaired after cancellation of its banking licence.

The report further notes that rental yield was low in 2014 resulting from unpaid rentals from the US$44 million Beitbridge Hotel.

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