The Government, has approved a recommendation from the NSSA Board to implement a self-adjusting mechanism for benefits pay-outs that will see them pegged against the Reserve Bank of Zimbabwe’s auction rate, with effect from 1 January 2022.
Current minimum pension payments are pegged at the equivalent of US$60 and US$70 for the Pension and Other Benefits Scheme (POBS) and the Accident Prevention and Workers Compensation Scheme, respectively.
NSSA General Manager, Arthur Manase, said although the compulsory pension fund increased benefits levels to the desired US dollar equivalent in January as it had promised, the amounts that were paid fell short due to disparities in the rate that was used on conversion against that which prevailed on payment.
“The Authority recommended increases in all pensions in payment for the POBS and APWCS schemes of 21% and 20% respectively effective 1 January 2022 while it was recommended that the minimum pension be increased to ZWL$6,000 and ZWL$7,000 for the POBS and APWCS respectively. The purpose of the increase was to equate the minimum pension for the POBS and APWCS to at least US$60 and US$70 respectively at the official ZWL:USD exchange rate.
“At the time of the proposal the USD:ZWL exchange rate was averaging 97 following a long period of stability at around 88 for the greater part of 2021. In this regard, the minimums that we paid in January fell short of the promised US$60 and US$70 at the auction rate,” said Manase.
He said the official USD: ZWL exchange rate was at 1:113 as of 18 January 2022, which eroded minimum pay-outs to the equivalent of US$53 and US$63 for POBS and APWCS, respectively.
Based on this the minimum level for POBS has been revised to ZWL$6,900, which is an adjustment of 15%, with those earning above the minimum enjoying a similar increment effective of 1 January 2022.
The APWCS minimum has been increased to ZWL$8,050 and those earning above that threshold enjoying a 15% increment effective 1 January 2022.
Manase said the shortfalls from the January payroll would be honoured in February, adding that a self-adjusting system would now be implemented to provide a lasting solution.
“As a result of these disparities, the minister authorised the implementation of a self-adjusting mechanism that will see minimum benefits move in line with the official USD:ZWL exchange rate as published by the RBZ, provided sufficient contributions and investment income is earned to guarantee ongoing liquidity and sustainability of the fund,” he said.