PPF'S DECISION TO HALT WITHDRAWALS SPARKS FRESH ROW

PPF Director General Willian Erio confirmed to The Citizen that the corporation had indeed stopped issuing the withdrawal benefit. He noted, however, that it was a legal requirement. 

By Bernard Lugongo
Dar es Salaam. Workers’ union leaders are preparing a fresh showdown with the government over what appears to be a decisive move to block pension funds members from withdrawing their savings before they are 55 years old.
The Mine Workers Union particularly circulated a document on social media to alert workers on the new move and indicated it would campaign against it.
Reports by scores of workers who have been blocked from accessing their savings by the PPF Pensions Fund sparked off the current anxiety among employees.
PPF Director General Willian Erio confirmed to The Citizen that the corporation had indeed stopped issuing the withdrawal benefit. He noted, however, that it was a legal requirement.
Reports suggested that other pension funds such as National Social Security Fund (NSSF), Public Sector Pension Fund (PSPF), Local Authorities Pension Fund (LAPF) and the Government Employees Pension Fund (GEPF) were considering a similar line of action.
Even though Ms Irene Isaka, who is the Director General of the Social Security Regulatory Authority (SSRA), denied there was an official directive to block members’ withdrawals, her assurance appeared to raise more questions than answers.
This, more so, as employees continued to share their experience to prove that the pension funds were indeed acting on some sort of a directive to bar members from the age old practice.
Employees at a local bank who talked to The Citizen confided that some NSSF officials who visited their offices last week told them of new directives, allegedly from the State House regarding the withdraw benefit. According to the sources, the NSSF officials said the State House had released communication to pension funds forbidding them from offering withdrawal benefits to its members.
“The NSSF officials told us during an induction meeting in our office last week that they have been forbidden from offering withdraw benefits to their members… they said the government wants them to use the money to boost the industrial sector,” one of the workers said.
But Ms Isaka told The Citizen that she was not aware of such a directive. “In government, we always communicate in writing, and, as the regulator, we have not received any such written communication,” she said.
The acting Director of Presidential communications, Mr Gerson Msigwa, could not categorically deny or confirm the claim about the State House communication. “If they have confirmed not to receive such circular, it is not obvious then that the State House issued such directives,” he said in a telephone interview.
Separately, an NSSF official who wished not to be named as he was not the official spokesperson said his organisation “had only heard the development as a rumour” and was still consulting on the matter. He said the organisation has so far no grounds to halt the withdrawal benefits.
“This matter once caused chaos in recent years and it did not go down well with most of our contributors and thus consulting on which way to take,” he said, while urging workers to appreciate the greater benefit of not withdrawing early to safeguard their retirement plans.
NSSF’s Director General, Prof Godius Kahyarara, and Corporate Communications Manager, Ms Eunice Chiume, could not be reached yesterday to shade light on their position.
Withdrawal benefit is a lump sum payment equal to members’ and employers’ contributions plus accrued interest payable to a member who has resigned from employment, has been retrenched, dismissed or terminated on medical grounds, abolition of office, or any other cause.
The last time a similar thing cropped up was in 2012 when an amendment in the Social Security Law introduced the withdrawal ban. But unionists teamed up with MPs to oppose the enforcement of the law, but which apparently remains unchanged.
It is this law that Mr Erio was referring to when confirming that PPF would not allow members to access their savings before retirement.
“Everything has its laws, we pay benefits according to the law guiding the PPF’S operations and I don’t know whether there is such a thing as withdrawal benefit in the law,” Mr Erio said.
“We can’t just decide that this member should be paid this way and the other paid that way, we have to follow the law otherwise we will be sued for going against the law,” he insisted.
However he dismissed the reports that they may also have received the new directive to do that.
PPF’s director of Legal Affairs, Ms Vupe Ligate, said some members of the PPF were only lucky since they managed to get their early benefits during the time when stakeholders were protesting the 2012 law amendment.
“But after the situation cooled down we continued enforcing the law because we realised that politics had been at play,” she said.
A promise to the unions by the government to table another amendment to remove the earlier clause that blocked the withdrawals has not materialized yet.
A study by the NSSF shows that from 2007 to 2011, withdrawals across all pension funds soared from Sh46.6 billion ($29.125 million) to Sh119.66 billion ($74.788 million), equivalent to 29.7 per cent of total benefits paid. Pension funds have argued that the withdrawals were hurting the schemes’ long-term plans.

CREDIT: THE CITIZEN