ZIMBABWE’S state run pension fund says government has paid up its contribution arrears by issuing US$180,9 million worth of Treasury Bills.
The National Social Security Authority (NSSA) said government had been lagging behind in adjusting contributions for state employees from six percent to seven percent and the earnings ceiling from US$200 to US$700 per Statutory Instrument 61 of 2013. The state also did not remit its portion of the employer’s contribution for three years, spanning September 2013 to October 2016, NSSA said.
“While it (government) remitted employee’s’ portion of deducted contributions, it fell behind in remitting the employer’s contributions. Both these actions resulted in Government accumulating arrears of US$180,9 million as at December 31 2016. This meant that the highest paid civil service pensioner would only get a maximum of US$60,00 pension,” said NSSA chairman Robin Vela in a statement.
“The clearance of contribution arrears by government has an immediate positive effect on retired civil servants as those who retired earning more than US$200 will now have their pensions adjusted upwards to accommodate the revised contributory rate and their actual earnings up to the earnings ceiling of US$700.”
The TBs have a tenure of 7 years and a coupon rate of five percent per annum. With no access to liquidity Government has resorted to the issuance of TB’s to finance its activities, it has to date issued $2.1 billion worth of the paper.
Vela said that as a long term investor, NSSA can afford to hold the TBs to maturity.
“On the investments front, the interest income from the boosted TBs portfolio will contribute to improved liquidity of the schemes,” Vela said. – The Financial Gazette