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Govt starts contributory pension scheme

Government has finally rolled-out the contributory pension scheme effective July 1 2017-roughly six years after an enabling law dictated it, Weekend Nation has learnt.

Under the arrangement, newly-recruited employees and those aged 35 years and below, will migrate to the scheme that Old Mutual will manage.

Chilabade: Pension Act was ammended

In a circular Weekend Nation has seen addressed to all principal secretaries and heads of departments signed by Secretary for Human Resource Management and Development Blessings Chilabade, government will be contributing 10 percent towards its employees’ pension.

“As you are aware the Pensions Act of 2011 made it mandatory that all employers should provide pension to their employees regardless of their term of employment, whether on permanent or contract.”

Chilabade said government as an employer was given grace period by the Pensions Act to migrate from its current pension scheme to the contributory one.

The move, he said, would allow it to properly manage the transition considering the huge amount of liabilities required for all eligible employees in the civil service.

“I would like to inform you that government has adopted a phased approach to the migration, where effective 1st July 2017, only newly-recruited employees and those aged 35 or below will migrate to the contributory pension scheme.

“This implies that all employees in the contributory pension scheme will be contributing a minimum of five percent of their monthly salary while the government will be contributing a minimum of 10 percent of an employee’s monthly salary to the pension scheme;” said Chilabade.

He called on all ministries, departments and agencies (MDAs) to cut the five percent from the employees’ monthly salaries at source.

Director of Pensions and Financial Policy in the Ministry of Finance, Economic Planning and Development Ambrose Mzoma told Weekend Nation that the new pension scheme will not cover all the civil servants as those above the age of 35 will still be on the old scheme.

“All the employees in the contributory pension scheme will have their past liabilities calculated and deposited in their pension accounts, which will be opened by the administrator,” he said.

The accountant general will remit both the minimum five percent employees’ contribution and 10 percent employer’s contributions to the contributory civil service pension scheme.

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