That’s why new reports that six pension funds made a record overall return on assets of Sh6.4 trillion ($4 billion) in the year ended June 2013, up from Sh5.6 trillion ($3.5 billion) last year, are encouraging.
For months, Tanzania has been in the news for all the wrong reasons—corruption, drug trafficking, abductions, torture, bomb attacks, political skullduggery, clashes between pastoralists and farmers, highway banditry, questions about the efficiency of Cabinet ministers and mistrust over the constitutional review.
That’s why new reports that six pension funds made a record overall return on assets of Sh6.4 trillion ($4 billion) in the year ended June 2013, up from Sh5.6 trillion ($3.5 billion) last year, are encouraging.
The Social Security Regulatory Authority (SSRA) says the funds’ investments rose from Sh4.2 trillion ($2.6 billion) a year ago to Sh4.9 trillion ($3.06 billion) this year.
Overall membership benefit payments have reportedly improved from Sh724 billion ($453 million) in 2012 to Sh1.06 trillion ($663 million), the highest amount ever paid. The number of pensioners rose from 72,000 in 2012 to 78,000 this year. The funds’ investment portfolio has been moving towards fixed income assets and smaller amounts in equities and properties. This means investment options are limited due to low development of the financial market.
Members’ contributions rose from Sh1.4 trillion ($875 million) in 2012, to Sh1.6 trillion ($1 billion) this year. The growth is accredited to a membership rise from 1.7 million in 2012 to the current 1.8 million members. SSRA has asked employers to give equal opportunity to all funds and allow new employees to join social security funds of their choice.
Early last month, SSRA said all recommendations made on benefit harmonisation of pension funds were at the Cabinet level. If approved, the harmonisation process will take place before 2015, allowing free movement of members from one fund to another with the same benefit rights. The growth is a sign of improved funds management.
Benefits for members
We support SSRA’s recommendations. It is incumbent upon it to ensure that pensioners benefit from the growth by coming up with improved packages. Working members should also benefit from the growth.
We are aware that the National Social Security Fund, PPF Fund, and Local Authorities Pension Fund are constructing houses for sale to members. Social security scheme products, such as mortgage facilities and loans for education and business are on the rise. Some funds have already started issuing loans through savings and credit co-operative societies.
The funds should invest member contributions judiciously, away from political whims. We wonder how they can recoup their money through seemingly wasteful projects.
One thing is clear: the money belongs to members only. It should not be wasted on politically-motivated projects that have no economic benefits.
We are thus calling on SSRA to be vigilant to ensure member contributions are managed properly.
As the returns on assets improve, this should translate into better payments for members. The funds could also plan to cast the net wider and capture more members.
