Government has conceded that it has slipped to four months—from one month—the period it takes for its new retirees to access their benefits.
In 2016, government had reduced the period from 18 months to one month following implementation of pension reforms after it adopted a first-retire-rirst-pay (FRFP) principle to clear the pension arrears.
Ministry of Finance, Economic Planning and Development Principal Secretary (PS) Ben Botolo in a telephone interview attributed the downward trend to cash squeeze affecting government.
He said during the current financial year Treasury contributed about K15 billion as pension funds to cater for its employees migrating to the new pension scheme.
Said the PS: “In terms of people who are going on pension they are more, at the same time we have to find some money to create a pension fund for the civil service, so that process has put is back to three to four months backlog, but we are managing it.”
Apart from reducing pensions and gratuities backlog, other reforms include abolishing early retirement after 20 years of continuous service and opting for early retirement at 50 years of age.
The recommendation is one of the pension reforms government plans to carry out to reduce the pension bill and encourage civil servants to serve longer.
But Civil Service Trade Union (CSTU) general secretary, Madalitso Njolomole has described the development as worrisome, saying government has an obligation to ensure that retirees are paid their money in good time.
He said: “It is sad that this is the case now, but it’s so frustrating for a civil servant who has served government for such a long time to struggle to get his benefits . We urge government to prioritise the payment of pension money to desperate retirees.”
The build-up in terms of paying pensions and gratuity started in 2010 when the courts ruled that government should revert to the old formula for calculating pensions and gratuities.
The court’s decision meant that those who retired between 2005 and 2010 had to be given their gratuity arrears based on the old formula.
In the 2016/17 National Budget, government provided K50.2 billion for the payment of pensions and gratuities to retired civil servants.
This was more than double the K20 billion allocations to pensions and gratuities in the 2015/16 financial year.
Minister of Finance, Economic Planning and Development Goodall Gondwe justified the increased from K50.2 billion to K70 billion in his 2017/18 Budget Statement to Parliament, saying the resources were needed for adopting the new FRFP system.
“As we migrate to the National Pension Scheme, it is being proposed that we start a process of eliminating these pension disparities between the two groups of retirees. It is proposed to start with a 200 percent increase of pensions of those who retired prior to 2004 and hold the pensions of those who retired after 2004 constant during the process until the two are equated.
“The budgeted increased pension bill from K50 billion to K70 billion [thus] partly reflects the needed resources for such an increase,” he said.
