Before the National Social Security Fund (NSSF) can increase the monthly deductions it intends to get from salaried employees, it is imperative that the government addresses its own pension plan for civil servants.
The National Treasury, which has joined talks on how to make the raised deductions a success, ought to first of all give the public an assurance that the money private sector employees pay for their own retirement benefits will not be diverted to pay retiring civil servants.
Secondly, NSSF itself should not get away with just raising the contribution. It must table a plan showing first, how pensioners’ money will be ring-fenced to ensure that it is not lost in dubious investments as has happened with some pension funds. Secondly, it needs to guarantee minimum returns to its members. If these two conditions are not met, there is no justification for raising member contribution.
Privately-managed pension funds routinely send annual reports indicating how much each member has saved, how much the savings have earned, and the date by which the pension matures. NSSF ought to do the same.
That means it must embrace digital technology and also compete favourably with privately-run funds to make it attractive rather than just rely on fiat.