Adequacy of Current Social Security Benefits

Presented by Kate D. BandaweDeputy Director GeneralNational Social Security Fund -Tanzania

Agenda

Background Social Security Institutions (SSIs) in

Tanzania Benefits offered by SSIs in Tanzania Adequacy of Current Social Security Benefits Problems / Challenges

Background

ILO Convention 102 of 1952:- Benefits are contract between insured and SSI

Short term benefits:-• Medical care• Sickness• Unemployment • Employment injury• Maternity• Family assistance

Long term benefits:-• Old age• Invalidity• survivorship

Main Characteristics of Benefits Offered by SSI

Focusing on nucleus family Concentrate on the formal sector Financed through contributions Focuses on future risks

Social Security in the United Republic of Tanzania

Tanzania has a population of about 35.4 million people

About 16 million represent capable labour force (adult aged 15-60 years)

Slightly over 1 million are in formal employment, out of these about 776,000 persons are covered by social security schemes equivalent to 4.85% of the whole labour force

15 million labour force not covered by the formal social security protection

Social Security Institutions in Tanzania

National Social Security Fund (NSSF) Parastatal Pension Fund (PPF) Public Sector Pension Fund (PSPF) Local Government Provident Fund (LAPF) National Health Insurance Fund (NHIF) Government Employees Provident Fund

(GEPF) and, Zanzibar Social Security Fund (ZSSF)

The profile of Social Security Institutions in Tanzania

Name Year Coverage Membership Contributions

Rate(%) Eas Ers

NSSF 1964 Private 400,000 20 10 10

PPF 1978 Parastatal and private

60,000 20 5 15

LAPF 1944 Local Govt 40,000 20 5 16

NHIF 2000 Goverment 275,000 6 3 3

GEPF 1942 Police and prisons

15,000 25 10 15

PSPF 1999 Central Govt 215,000 20 5 15

ZSSF 1998 Govt and private

46,000 15 5 10

A Model of Social Security Industry in Tanzania

Benefit offered by National Social Security Fund - NSSF

NSSF offers 7 out of 9 contingencies of ILO standards:- Old Age Pension Survivor Pension Invalidity Pension Maternity Funeral Grant Health Care Benefits Employment Injury

Benefit offered …..

Old Age Pension:- Attainment of Pensionable age (55-60yrs) 180 Pension Credits (15 years) Late age entrants recognized by accepting

lesser number of pension credits Benefits Payable:- Monthly pension (MP) Initial lump sum (MP x 24)

Benefit payable …..

Special lump sum for non qualifiers – average Last years contributions x total numbers of pension credits.

Pension = 30% up to 67.5% of Average monthly earnings (AIME)

Minimum pension = 80% of statutory minimum wage (SMW)

Invalidity Pension Suffering from a permanent disability

Under the Pensionable Age

180 contribution credits or at least 36, out of which 12 are immediate to the date of invalidity

Benefit offered

Benefit offered

Survivors Pension Death of an insured person Legal dependants left behind Member had qualified for monthly pension Benefit payable:- Monthly pension calculated as in retirement benefit Divided at 60% (children and 40% Spouse (S) or

100% to parents

Benefits offered

Benefits Payable 2 years pension for a spouse less than 45

years and is not taking care of a disabled/minor child (<15 years)

12 month lump sum if the deceased member had started drawing pension

Special lump sum for deceased member who had not qualified for pension

Benefits Offered

Funeral Grant Reimbursement for burial expenses incurred

• Conditions: Members made at least 1 contribution Burial expenses been incurred Claim submitted within 60 days.

• Benefits Payable: Determined by the Board from time to time Depending on contribution levels ($75 to $300)

Benefits Offered

Maternity Benefits Member is in a state of expected confinement Made at least 36 contributions, 12 of which are

immediate to the date of confinement. Every 3 years unless the child dies within 12 months.

Benefits Payable: Cash benefits at 100% of Average Insurable Daily

Earnings (AIDE) for 12 weeks Medical care for pregnancy related diseases Services cover a period from 24th week to 48 hours

after delivery.

Benefits Offered

Employment Injury Benefits Sustained injury or occupational diseases at the

workplace

- 50% of AIDE up to 26th week of incapacity. - 60% of AIDE for up to 7 years for permanent

Disability. - Provision of artificial limbs - Death benefits to survival same as permanent

disability.

Health Insurance

Medical care to an Insured Person, a spouse and up to four children

At least 3 month contributions immediately before contingency

Ceases within three months from the last contribution date

Retiree may continue enjoying if they contribute 6% of their monthly pension.

Benefits Offered

Healthcare Services

- Out-Patient Services

- In-Patient Services

- Services provided thoroughly

- Accredited Medical providers

- Capitation payment to providers

Benefits Offered…

Adequacy Minimum Pensions (in USD) V/S National

Consumers Price Index

Year Name of SSI Exchange Rate (Tshs/USD)

National Consumer Price Index

NSSF PPF PSPF

2002 24.51 15.32 21.45 979.11 101.0

2003 22.87 14.29 20.01 1,049.58 104.5

2004 30.16 13.62 19.07 1,100.92 108.9

2005 29.10 18.41 18.41 1,140.95 113.6

Adequacy The relevancy of the Convention on specific

characteristics prevalent in Africa.

Extended families v/s nucleus families

Informal sector v/s formal sector

Covariance risks like HIV/AIDS, famine, civil wars not covered

Immediate needs such as shelter, schooling etc…

Problems / Challenges It is apparent that the Social Security Benefits in

Africa and Tanzania in particular are inadequate due to the following :-

Benefits offered are not relevant to Africa Covariance risks like HIV/AIDS, famine, Civil wars

are not covered Immediate needs not given the requisite priority Benefits are too small to meet the basic needs Short-term benefits cease after retirement Maintaining the value of benefits against inflation.