Government to revamp Nssa Act

HARARE - Government plans to revamp the National Social Security Authority (Nssa) Act by reviewing certain aspects stipulating how investments will be undertaken using pension funds.

Finance minister Patrick Chinamasa said concerns have been expressed over Nssa's multi-million dollar investments.

"…developments to date show that Nssa is losing policy holder deposits following investment in areas that do not improve the welfare of pensioners. Government will, therefore, be proposing review of aspects of the Nssa Act," he said in his 2015 National Budget.

This comes as the pensions fund administrator has been under the spotlight for failing to adequately reward pensioners while their contributions are channelled to other investments.

Nssa has written off $5,6 million in loans inherited from the now defunct Capital Bank Corporation Limited (Capital Bank). The bad loans surged from $52 073 in 2012. Capital Bank was 87 percent-owned by Nssa.

Recently, the authority's finance director Patrick Mapani said the loans, struck off the books last year, were not extended to Capital Bank by Nssa, but "it is the bank which actually gave out loans to its clients and now writing off some of them".

"The figures are exactly as per the Capital Bank audited financial statements and we are seeing them on Nssa financial statements because of consolidation," he said.

In Nssa's financials for the year to December 2013, general manager James Matiza said the consolidation of Capital Bank, together with First Mutual Holdings Limited, contributed about $202 million (24 percent) to total assets.

This comes as Capital Bank shut down in June this year after the Reserve Bank of Zimbabwe (RBZ) cancelled its licence.

Nssa, as the major shareholder, was reluctant to inject additional capital into the bank.

"The bank has been operating in an unsafe and unsound financial condition characterised by critical under-capitalisation, persistent losses, chronic liquidity challenges and inordinately high levels of non-performing loans," said the central bank.

Nssa pays pensioners around $60 per month, which was increased from $40 a month while the minimum survivor's pension and invalidity pension was hiked from $20 to $40 per month.

Nssa investments also include a recently built hotel in Beitbridge in partnership with listed Rainbow Tourism Group (RTG).

It also extended a $4,4 million loan to equip the hotel.

Recently, RTG revealed that it recorded a slump in earnings before interest tax and depreciation and amortisation (Ebitda) in the half year to June 2014 due to slow business at the Beitbridge Hotel.

Tendai Madziwanyika, RTG group chief executive told an analysts' briefing in September this year that the Ebitda loss was a direct result of high start-up costs and low revenues.

This year, Nssa also demolished the Ximex Shopping Mall in Harare's Central Business District and revealed plans to construct a multi-million dollar 11-storey building.