Tanzania:Govt Cracks Down on Employers for NSSF Violations as Rising Pension Reform Demands Intensify

By Adonis Byemelwa

Dar es Salaam. The government has stated that it will no longer tolerate private sector employers who deduct their employees' contributions but fail to submit them to the National Social Security Fund (NSSF), as this is against the law and deprives employees of their right to timely benefits upon retirement.

This statement was made on May 14, 2024, by Deogratius Ndejembi, the Minister of State, Prime Minister’s Office, Labour, Youth, Employment, and Persons with Disabilities, during a working visit to the NSSF offices in Dar es Salaam.

Minister Ndejembi urged employers with such practices to stop immediately, warning that those who are found will not be spared. Deducting funds from employees without remitting them to Social Security Funds causes difficulties for employees when they retire or when their employment ends, as they are unable to receive their various claims on time.

He mentioned that some employers only submit ten percent of the employee's contributions to the Funds but fail to remit the employee's ten percent contribution, which is against the laws governing Social Security Funds. The law requires employers to deduct a total of twenty percent, which is legally mandated.

The minister stated that some retirees face delays in receiving their benefits due to employers not submitting their employees' contributions on time, causing significant hardship for retirees and creating a false impression that the Social Security Funds are responsible for the delays.

"We will now be very strict with all employers who do not submit contributions on time because this is a legal requirement established by these Social Security Funds, ensuring that employers submit their contributions on time. We will enforce this rigorously," said Ndejembi.

Ndejembi expressed satisfaction with the performance of NSSF, noting that the Fund's value has grown significantly since President Dr. Samia Suluhu Hassan took office in March 2021, from TZS 4.8 trillion to TZS 8.1 trillion within the three years of the sixth-phase government.

"This is a remarkable growth and demonstrates the great achievements of the sixth-phase government and the excellent performance of the Fund, managed by the Board of Trustees, Management, and NSSF employees," said Hon. Ndejembi.

He noted that despite these achievements, there are fundamental issues they want to see addressed, including enhancing customer service for Tanzanians contributing to the Social Security Funds, ensuring they are served promptly, and their challenges are continuously addressed. He also stated that NSSF, in its efforts to improve services, has developed ICT systems to ensure members receive services more quickly.

Regarding investment, Ndejembi said he would ensure that Tanzanians' funds in the Social Security Funds are invested wisely and with integrity in projects that yield positive results and return members' funds to pay benefits on time.

NSSF Director General Mr. Mshomba thanked the Minister for the working visit and promised that all the directives and emphases would be implemented.

Mr. Mshomba said NSSF continues to focus on improving customer service, which is part of the Fund's Strategic Plan, and currently, they are focusing on the use of ICT.

He added that they will continue making productive investments following the guidelines of the Board of Trustees, the Bank of Tanzania, and the Prime Minister's Office, and assured members that NSSF's commitment is to grow as per the expectations of President Dr. Samia by reaching members from both the private and informal sectors.

Despite these positive remarks, NSSF has been mired in scandals involving the mismanagement of retirees' benefits. Numerous retirees have reported significant deductions from their benefits, causing uproar in Parliament.

Legislators have accused the government of exploiting retirees, contrasting the plight of ordinary citizens with the lavish treatment of MPs, who receive over TZS 217 million after serving just five years without any deductions. This disparity has fueled public outrage and calls for reform within the NSSF and the broader pension system. In a no-nonsense display of advocacy, Special Seats on April 4, 2024, a passionate debate erupted in the Tanzanian parliament as Member of Parliament Ester Bulaya demanded urgent government action to address the mounting debts owed to pension funds and overhaul the outdated pension calculation system. Her impassioned plea during the review of the government's performance and financial projections shed light on the dire financial insecurity faced by retirees across various sectors.

Bulaya's call for reform struck a chord as she highlighted the plight of retirees, including soldiers, teachers, nurses, and doctors, who struggle despite years of dedicated service. At the heart of her argument was the government's failure to fulfill its promises regarding pension benefits, leaving many retirees in financial distress.

Contrary to parliamentary instructions and advice, Bulaya emphasized the urgent need to uncover the true earnings of MPs, which may or may not reach the TZS 18 million figure cited by opposition leader Freeman Mbowe. Mbowe's criticism of parliamentary self-interest and obsession with personal enrichment schemes has resonated deeply, particularly as the majority of Tanzanians continue to suffer in poverty.

Mbowe's allegations extend beyond parliamentary earnings to include spousal benefits, exposing a system seemingly more focused on personal gain than addressing the needs of marginalized citizens. As the debate intensifies, questions about the true intentions of those tasked with representing the people loom large.

Adding to the complexity, all employers registered with the National Social Security Fund (NSSF) are required to remit 20% of the employee's monthly salary, as stipulated by Sec. 12 of the NSSF Act [Cap. 50 R.E. 2018]. This joint contribution, split equally between employer and employee, is crucial for sustaining the pension system.

The nation watches as the debate over pension reform and parliamentary accountability rages on, demanding transparency and action to ensure a fair and secure future for all Tanzanians. The question remains: will the government step up to fulfill its promises, or will the voices of the marginalized continue to be drowned out by personal interests?