Government has approved the increase of the minimum wage for 12 013 least paid retirees to K100 000.
A memo dated October 16 2024 signed by Secretary to the Treasury Betchani Tchereni and addressed to the Accountant General and Budget Director says the increase only applies to retired civil servants whose pension was below K100 000.
It said the rest of the retired civil servants will continue to receive the normal amount of pension.
“I, therefore, advise you to effect the increase of the minimum pension accordingly with effect from October 1 2024,” reads the memo.
Treasury spokesperson Williams Banda in a written response yesterday justified the move saying government has noted that some pensioners were receiving as low as K15 000, saying many public servants, especially those in lower salary grades, retire with limited savings or retirement benefits.
He said a minimum pension ensures that all retirees, regardless of their previous salary levels, receive a basic level of income to cover essential living expenses.
“This helps lessen poverty among former public servants who may have no other source of income. You may also wish to know that pensioners who are least paid are denied access to social cash transfers targeted to vulnerable people.
“Basically, this arrangement will help mitigate the effects of various economic factors, ensuring that retirees can afford basic necessities such as food, healthcare and shelter,” he said.
Banda, however, could not come out clearly on where government would source the funds to aid the adjustment, saying as a priority, the adjustment has already been incorporated in the mid-year budget review.
He said: “One of government’s priorities is to provide adequate social protection to vulnerable people including the least paid retirees, many of whom are facing financial challenges and are above 75 years.”
Chairperson of the social and community affairs committee of Parliament Savel Kafwafwa said they already supported the revision considering the prevailing high cost of living.
He, however, said it is strange that government is still in charge of paying pensions for its workers, which he said is subject to national budget funds but increases the wage bill.
Kafwafwa suggested that to avert wage bill pressure, government should implement reforms by pursuing the route of remitting monthly pensions to a pension fund.
“The normal pension formula is that workers’ money should be paid to an insurance company which upon retirement will transfer the funds to the workers’ bank accounts.
“A fraction of the money which has been invested caters for the monthly pension. If the company makes more money, the monthly pension also increases,” he said.
Economist Alick Nyasulu said in an interview that while taxpayers are expected to foot the bill, government is also bound to pay its retirees and find other ways of cutting expenditures to cover the rise.
He said it is encouraging that government is recognising the high cost of living given that inflation is now at 34 percent.
Nyasulu hoped that there will be a way to have an inflation sensitive adjustment of pensions for all levels of retirees.
“That is why it is important that taxpayers pay their fair share and those entrusted with managing public resources undertake a moral and national duty to prudently manage public finances. “While increase in pensions is likely to increase the deficit, these are statutory expenditures whose failure to pay can be very chaotic for the economy,” he said.
