What has riled the trade unions most is that government already owes NSSA in excess of US$100 million in unremitted dues.
Christopher Mahove
TWO of the country’s largest labour unions have rallied to oppose proposals by government to create a single payment system that would see pension contributions meant for the National Social Security Authority (NSSA) being collected by the Zimbabwe Revenue Authority (ZIMRA).
For long symbols of the polarisation in the labour movement, the Zimbabwe Congress of Trade Unions (ZCTU) and the Zimbabwe Federation of Trade Unions (ZFTU) have put their ideological differences aside to unite against what they called a “class struggle” they claim would be costly to pensioners.
Both federations are now set to tackle government, which is spearheading the proposals through the Office of the President and Cabinet (OPC).
The plan is being viewed as a desperate attempt to widen government’s revenue collection base to fund recurrent expenditure.
What has riled the trade unions most is that government already owes NSSA in excess of US$100 million in unremitted dues.
None of the unions therefore trusts government, a bad debtor, with the collection of funds on behalf of NSSA.
ZIMRA is a government tax collection agency.
ZFTU secretary general, Kennias Shamuyarira, did not mince his words in a letter to the OPC dated November 2, 2015, saying the proposal was a wrong solution to a funding problem.
“While the ZFTU holds the view that the World Bank is an institution which has a track record of prosecuting anti-humanity socio-economic policy prescriptions the world over, we believe that this particular proposal to consolidate NSSA pension contributions did not originate from the World Bank, but from misguided internal sources who maliciously supplied the OPC with embroidered facts for illicit gain,” wrote Shamuyarira.
“If the consolidation of NSSA contributions under ZIMRA is in terms of a directive from the OPC, such a directive was obtained after certain interests had supplied the OPC with inaccurate facts or information”.
Investor perception, with respect to the ease of doing business in Zimbabwe, Shamuyarira noted, was not influenced by the issue of pension remittance by NSSA, as it was never a hindrance to the smooth conduct of business in Zimbabwe or anywhere in the world.
While the intervention of the OPC to stop the rot at the pay-as-you-go pension scheme was a noble one as it sought to reduce the prevalence of policy ambiguities, the directive fell short of the traditional taxation principles as it had the risk of including workers’ pensions in the basket of taxes that accrued directly to the fiscus.
Fears abound that ZIMRA, which has been failing to meet its revenue collection targets, would channel the money to meet government’s recurrent expenditure.
The arrangement would also take away NSSA’s right to manage its affairs independently as it would have to raise requisitions and submit them to the Ministry of Finance whenever they want to purchase something, even toilet paper, he said.
It would also come at a huge cost to pensioners as they would incur an avoidable 10 percent in terms of actual benefits paid out to them.
“NSSA contributions are pension contributions and the defined benefits thereof accrue to the policy holders and not the State. The consolidation of NSSA contributions under ZIMRA does not fit into the business model of pension funds as the timing of payments of receipts into the fund is a critical determinant of the ultimate benefits payable to retirees,” said ZFTU.
ZCTU secretary general, Japhet Moyo, predicted the total collapse of the NSSA pension scheme should the proposal be allowed to proceed.
“This is not about the efficient collection of revenue because if it was, ZIMRA should have been able to collect enough money (from tax defaulters). Government cannot meet its obligations right now and we wonder if they will be able to remit what they would have collected on behalf of NSSA to be invested for future pensions when the revenue base continues to shrink.
“If this money is channelled to recurrent expenditure and nothing goes to investments for future pensions, then the scheme might collapse in the long run,” he said.
If ZIMRA was efficient, Moyo said, it would have been able to collect enough money from the country’s porous borders through which billions of dollars are lost through smuggling and other vices.
“We are working together with the ZFTU and other like-minded organisations, including employers, to put the record straight because in our view, when the OPC sanctioned this initiative, they had been misinformed,” Moyo said.
The ZCTU leader said if dialogue at the Tripartite Negotiating Forum failed, they would mobilise pensioners and the working population against the initiative as it would affect their future and that of their children.
ZCTU is linked to the Movement for Democratic Change while ZFTU is sympathetic to ZANU-PF.
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