Companies heed call for pensionable allowances
THE majority of employers in the country have taken heed and are complying with Government’s policy to make allowances pensionable.
This follows the Government’s recent order, which declared that all public service workers who earn in foreign currency would be required to pay their pension contributions in the same currency.
The Government recently promulgated Statutory Instrument (SI) 169 of 2024 ,8 (b) (4) which states that: “Any person in Zimbabwe who earns remuneration in a currency other than that of Zimbabwe shall be required to pay his/ her contributions in foreign currency.’’
Many employees earn salaries in both the Zimbabwe Gold (ZiG) currency and United States dollars.
The policy directive requires that workers should use the same ratio in making their contributions.
A circular by the Government in May stated that the US dollar portion of the National Social Security Authority (NSSA) contribution would be implemented following the conversion of US dollar Covid-19 and cushioning allowances to pensionable emoluments with effect from January 1, 2024.
Employers have started implementing this policy, according to NSSA.
Responding to questions, NSSA deputy director of marketing and public relations, Mr Tendai Mutseyekwa, revealed that while the majority of employers were complying with the call, those that lagged would be nudged with legal recourse.
“Indeed, the employers are complying with this legal requirement,” said Mr Mutseyekwa by email.
“For those that fail to comply, NSSA will resort to the legal recourse to bring them to compliance,” he added.
Previously, the social security authority received pension contributions from basic salaries (excluding allowances) and the conversion of allowances into basic salaries, according to the authority, is a welcome development as it increases contributions deductible and remittable to NSSA.
Employees themselves have warmed to the idea.
“Yes, there is buy-in from the contributors. The NSSA Act is prescriptive on its requirements.
“NSSA decisions are made through consensus of a Tripartite board established in terms of the Act, which includes representation from labour, employers and Government.
“The reason for this arrangement is to ensure that the views of all stakeholders are taken into consideration,” said Mr Mutseyekwa.
Speaking to this publication, some contributors were largely receptive to the idea, arguing that it would enhance their pension payouts.
“If I can contribute more to my pension now, while in my prime working years, to earn more during my retirement, then that would be great,” said Mr Isaiah Machona.
However, he also expressed some reservations.
“But we also face a real dilemma insofar as our incomes are already very low. There just isn’t more room for extra taxation, pensions or otherwise,” he added.
Another employee, who preferred anonymity, concurred, adding it was a catch-22 situation given the low salaries for the sector.
“All I know is that I am grossly underpaid, so whatever deductions they make are almost useless,” she said, adding she was also concerned about possible policy changes in the country that have a bearing on her pension benefits.
Levels of contributions have a direct impact on the resultant pensions that pensioners get at the end of their working lives.
NSSA revealed that these contributions are being largely affected by the existence of an insurable ceiling which currently stands at the local currency equivalent of US$700.
“NSSA workers and pensioners can be effectively assisted by the lifting of this ceiling so that their pensions can relate better to the levels of their individual earnings and lifestyles during their working lives.
“We are engaging all concerned stakeholders on this matter,” said Mr Mutseyekwa.