Vultures encircle pension fund

AN attempt by Finance Minister Mr Tendai Biti to "advise" the National Social Security Authority (NSSA) to bail out a technically insolvent bank has stirred a storm.

Is the Finance Minister playing "Greedy Minister" by deliberately targeting NSSA money, given that the authority collects millions of dollars every month from workers as pensions? Who exactly among the Government ministers is responsible for overseeing the affairs of the national pension scheme? Answers to this question will probably show that there is a struggle going on between the Minister of Labour and Social Welfare, Ms Paurina Mpariwa, and Mr Biti.

Analysts say it is either Ms Mpariwa has been elbowed out of her responsibilities or that the issue was discussed within the MDC-T structures and she was left with no choice but to succumb to Mr Biti, who is her superior in the party. But Ms Mpariwa is clearly not happy with Mr Biti's interference. She has since made it clear that NSSA funds must directly benefit workers, contradicting the position taken by Mr Biti.

In the midst of all that, tens of thousands of pensioners are watching the matter unfold, while they have to make do with low payouts which they view as peanuts. Questions are being asked as to why Mr Biti had the temerity to tell NSSA to invest in Renaissance Merchant Bank (RMB), which he recently described as "being run like a tuckshop".

Of all the institutions that offer investment opportunities in the country, why would Mr Biti want to "invest" pensioners' money in a tuckshop? While the NSSA Act is clear that the Minister of Public Service, Labour and Social Welfare is in charge of the authority, Mr Biti seems to have other ideas. He cites section 26 of the Insurance Act, which he says empowers him to regulate the insurance and pension industry, including NSSA.

Observers note that being a lawyer himself, Mr Biti seems to be dabbling in legal jargon to bamboozle the nation over a simple issue. Harare lawyer Mr Terrence Hussien said Mr Biti got it wrong when he declared that he had the powers to direct NSSA to put money where he wants. He said Mr Biti's directions to NSSA should be advisory and of a general nature.

"The Act says Mr Biti has the powers to give directions to NSSA, but on the Renaissance issue, for example, he abused his powers," Mr Hussein said.

"Mr Biti's directions should be of a general nature and not specific. He should also do everything in consultation with the NSSA board. He has the powers to give directions, but his powers are limited."

Section 26 of the Insurance Act being used by Mr Biti to interfere with NSSA says: "(1) Every insurer shall, in respect of the insurance business carried on by him in Zimbabwe, hold the insurance fund referred to in subsection (2) of section twenty nine in such prescribed securities and in such proportions of prescribed securities as may be specified by the Minister in terms of subsection (2).

"(1A) An insurer who contravenes subsection (1) shall be guilty of an offence and liable to a fine not exceeding level five or to imprisonment for a period not exceeding three months or to both such fine and such imprisonment.

"(2) The Minister shall, for purposes of this section, specify from time to time the prescribed securities and the proportions of the insurance funds which shall be held in prescribed securities so specified."

But some legal experts say Mr Biti went overboard in his interpretation of the section. They say it is clear from laws governing NSSA that the Minister of Labour and Social Welfare is responsible for the national pension scheme. They accuse Mr Biti of attempting to usurp Ms Mpariwa's powers that are vested in her by the National Social Security Authority Act.

Top Harare lawyer Mr Ashton Musunga said Mr Biti's actions were tantamount to abuse of office as he is virtually invading Ms Mpariwa's territory.

"My understanding of the matter is that NSSA is a body which deals with the labour force and, as such, it should fall within the Ministry of Labour," he said.

"I do not see the reason why NSSA's operations should fall within the Finance Minister's ambit." Mr Musunga said proceeds accrued by NSSA should be channelled to Treasury through the relevant Ministry of Labour and Social Welfare.

"If there are proceeds that come from NSSA, they should be remitted through the Ministry of Labour, since it is the governing ministry," he said.

The NSSA Act clearly states, in the definition of terms, that: "Minister" means the Minister of Public Service, Labour and Social Welfare or any other Minister to whom the President may, from time to time, assign the administration of this Act". This means that NSSA directly falls under the Ministry of Labour and Social Welfare and the pension scheme's officials have always reported to that ministry.

There are many other sections in the Act that empower the Minister of Labour and Social Welfare to deal with issues related to the running of NSSA. The minister has the powers to appoint the board, dismiss its members and establish more schemes for the provision of benefits to contributors. Many observers noted that Mr Biti's actions were meant to bail out RMB, which is a private concern with nothing to do with the workers' contributions to NSSA.

Many thought it was unfair for NSSA to bail out a bank that was ruined by its owners who defied good corporate governance. RMB had a negative capital of US$16,7 million against the prescribed minimum capital requirement of US$10 million for merchant banks. During the second reading of the Deposit and Protection Corporation Bill recently, Minister Biti told Parliament that he was firmly in control of NSSA.

"A myth has been created by some quarters that we have directed NSSA to give money ' we have not, but I want to say this, we could have done that," he said.

"In terms of section 26 (A) of the Insurance Act, the Minister of Finance has got powers of directing the deposits of insurance companies into what are called 'prescribed assets'.

"I have powers of directing Zimre, Afre, Old Mutual and NSSA to say put your money there. I could have acted on that matrix." But analysts said NSSA was a scheme totally different from private schemes and its administration was unique.

"NSSA is a national pension scheme and is compulsory," said a pensions expert who preferred anonymity.

"It is not the same with private schemes that are out there to make money and profits for the benefit of their shareholders.

"NSSA invests for the benefit of pension contributors and it is wrong for Mr Biti to think it is the same with private schemes."

Apparently this is not the first time Mr Biti has been accused of meddling in NSSA affairs and disregarding the powers vested in the Minister of Labour and Social Welfare. Sources at NSSA say Mr Biti unilaterally set the ceiling on insurable earnings at US$200 in the 2010 national budget without consulting officials at the pension scheme andactuaries. The move has threatened the existence of NSSA as the contributions are so low that there would be very little funds to invest to safeguard the pensions.

Mr Biti also reduced the rate of contribution from 8 percent to 6 percent. Observers say the move was meant to favour private pension schemes who complained that they could be pushed out of business by a NSSA that paid high pensions. NSSA general manager Mr James Matiza once said the organisation wanted to increase pensions, but it was being hindered by the low contribution rate. "We would dearly love to raise pension levels, but can only do so if contribution rates are sufficient to sustain such levels in respect of present and future pensions," he said.

It seems Mr Biti's interference with NSSA is set to have a negative impact on workers' pensions. Observers say workers are bound to lose confidence in the authority if it is not clear who exactly is in charge of their contributions.