Tougher action against employers not remitting pension contributions

Zvamaida Murwira-Senior Reporter

Errant employers who do not remit the pension contributions of their employees will soon face both criminal charges and civil action with the proposed Pension Fund and Provident Fund Act now being debated by the Senate, upgrading the present law to protect pension funds.

The Bill being debated this week in Senate replaces the present Pension and Provident Funds Act and upgrades the requirements for the registration and administration of pension and provident funds.

Clause 17 of the Bill compels employers to remit pension contributions deducted from their employees within 14 days from the end of each month or face criminal charges and civil action, with company directors or executives ordinarily responsible for pensions facing action in their personal capacity as well as representatives of the employer.

Errant employers have in the past been accruing huge debts to pension funds by not remitting contributions, even though they deduct these from employees’ pay, and that has paralysed financial operations of many funds.

During debate, Senators implored the Government to restore the value of pensions and also decentralise the payout of pensions given that most pensioners would be residing in rural areas when they retire.

Chiefs’ Council president, Chief Fortune Charumbira, said some of the pension funds such as a local authority would fail to pay their pensioners. 

“I thought you were going to address the issue of access to pensions by pensioners because they are no longer at work and they have relocated to Murehwa or Plumtree but, they used to work in Harare. They are asked to come to Harare where they do not have anywhere to stay. So, what should be done if someone leaves their employment so that they get help,” asked Chief Charumbira.

He said it was imperative that the Insurance and Pension Commission, as a regulatory body, should play a leading role in assisting pensioners, given that the bulk of its funds are from them.

“This Commission of Pensions where does it come in, because I have not seen anywhere where it helps people. It has to get money, but why does it not help people? This Commission is living on pensioners’ funds, so why does it not help the pensioners,” he asked.

Midlands Senator Morgan Komichi said there was need to restore the dignity of pensioners through paying them adequately.

Finance and Economic Development Deputy Minister, said the Bill sought to address a lot of challenges that pensioners were facing to ensure that they were afforded social protection.

“The Bill, when it becomes an Act of Parliament, will have to stand the test of time. Problems that are being addressed by this Bill are that a person can make contributions for the whole life but will not realise all that effort. We said when we go to depositors, we have the Depositors’ Fund. For pensions we want to have a Pensions Protection Fund. This will assist even if our economy changes downwards, pensioners will be protected,” said Minister Chiduwa.

He said in line with the Second Republic’s thrust of leaving no one or place behind, financial institutions would be established in remote areas to provide banking services.

“Government has a policy on financial inclusion. This policy states that in line with the policy thrust of Government, which says leaving no one and no place behind — people from where they are should get financial products. At banks which belong to Government — POSB, AFC — our policy is that at growth points where people live, these banks should be found,” he said.