Times Of Swaziland: ENPF MEMBERS PAID E313M, SAVINGS COULD BE DEPLETED

ENPF MEMBERS PAID E313M, SAVINGS COULD BE DEPLETED
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Ntombi Mhlongo on 07/04/2024 17:10:00


MBABANE – The effects of the delay in the conversion of the Eswatini National
Provident Fund (ENPF) into a pension fund may be too costly.
This is due to the fact most members are potentially in danger of depleting
their savings before reaching the standard retirement age, thus posing a threat
to the stability of the fund, if it were to be converted into a fully-fledged
pension scheme. It is currently being administered as a provident fund. The ENPF
Annual Report for the financial year 2023 reflects that from about E313.4
million paid out as benefits to members, a bigger chunk of it accommodated those
who fell under the age benefit category. The report reflects that a high
percentage, 60 per cent to be precise, of the money paid out was for the age
benefit, while only 18 per cent related to early retirement. It is stated that
the age benefit is paid out when the member has reached 50 years of age, whereas
the early retirement one is for members who are aged between 45 and 49 years and
have retired from regular employment.
This disparity, the ENPF, said, in the report, suggests a concerning pattern
where many members may deplete their savings before reaching the standard
retirement age. “We are optimistic that the proposed legislative
transformation of the fund into a pension scheme will address this issue,
offering a more sustainable financial future for our members and the nation as a
whole. It remains our deepest aspiration that we work towards the conversion as
it will bring numerous benefits for members and be all-inclusive of economically
active workers, while playing an impactful role in the national developments,”
the ENPF said. It mentioned that the workers’ inclusivity will encompass those
in informal and domestic work sectors. Also mentioned was that the delay in
concluding the important national project was not doing the members of the fund
any good.
“Members who would have qualified for membership of the pension fund in terms
of the minimum number of contribution years have fallen out of the qualifying
bracket. These members invariably become candidates for poverty in old age. The
only time that this situation will be arrested is the day the conversion will
receive the long-awaited approval,” it was highlighted.
The management of the fund said they were hopeful that the due processes that
have begun would eventually see the vision of the conversion become a reality
for the benefit of thousands of emaSwati. It has been over 10 years since the
plan to convert the fund into a pension scheme became public. Specifically, the
process began in the early 2000s, whereby stakeholders including employers,
workers and government engaged and there was a consensus on the conversion from
a provident fund to a pension fund. Experts from countries including Zambia and
Singapore were invited to discuss and share their experiences on the conversion
process.
ILO backs initiative
The International Labour Organisation (ILO) has also been supporting the
initiative, sending its own experts to engage with the local stakeholders.
However, despite all these efforts, legislation that will allow for the
conversion is yet to see the light of day. The delay pained members of the 11th
Parliament, as they had anticipated to have the conversion completed by the time
their term of office came to an end. During their last sitting to debate the
budget of the Ministry of Labour and Social Security, the former MPs took turns
relaying the frustration caused by the delay. It is worth mentioning that even
the 10th Parliament eventually left office without having passed the legislation
that would ensure the conversion. Instead, a bill that they debated and were
ready to pass was eventually withdrawn and they left office. Stakeholders in
support of the ENPF have argued that it was key for the Kingdom of Eswatini to
have a national pension scheme, as was the case in other countries including
Singapore. Once the legislation has been enacted, members of the fund who are 45
years and below, will transfer to the national pension fund.
Members who would qualify to receive pension are those who will have contributed
at least 15 years of service before retirement at the time of conversion. The
Singapore pension scheme is one of the oldest and developed national schemes in
Asia according to the Mercer CFA Institute Global Pension Index. Even though the
scheme has received backlash in the past, government made amends and reviewed
some of its metrics. The Kingdom of Eswatini is said to have modelled the one
that exists in Tanzania, where the National Social Security Fund (NSSF) covers
all other employers in that country and participation for both employers and
employees is compulsory. Meanwhile, there are many positives reflected in the
annual report regarding membership. Among them is the fact that as of June 30,
2023, the total members’ funds stood at E4.81 billion, reflecting an increase
from the previous year’s E4.46 billion.
Contributions received in the year under review totalled E452.9 million, a 7.3
per cent increase from the previous year’s E419.4 million, attributed to both
the annual rise in contributions and the positive economic rebound post-COVID-19
lockdowns.
growth in membership
In her statement, which forms part of the report, acting Chief Executive Officer
Futhi Tembe highlighted that the fund’s activities in the year under review
had been intricately aligned with its 2020-2025 Strategic Plan, focusing on four
critical areas being; finance and investments, human capital, systems and
business processes and member focus. “The tactical execution of this plan has
yielded substantial improvements in our financial and operational performance, a
testament to our strategic direction, as detailed in this report,” Tembe said.
She mentioned that the fund was beyond the midpoint of its existing strategic
plan and that in anticipation of the one that will run from 2026 to 2030, they
will evaluate progress and accomplishments in the new financial year. “This
appraisal will provide critical insights into our successes and areas of
enhancement, equipping us with the knowledge necessary to forge ahead with a
precise and robust strategy,” she said.
Meanwhile, the membership of the ENPF grew to 156 732 as of June 30, 2023. This
reflects a significant rise from 142 023 registered in 2022. The fund’s annual
report reflects that the number of active registered employers also saw growth,
with 6 659 on record compared to 6 077 in the preceding year. It was highlighted
in the report that with the introduction of the online claiming app, the fund
continued to exceed processing efficiency benchmarks with the average claim
processing and payout duration sitting at an impressive 1.14 days, an
improvement to last year’s 1.8 days and well below the established three-day
benchmark. Another positive cited in the report is that the fund witnessed an
uptick in compliance rates, achieving an average of 87.98 per cent, which edged
closer to a target of 92 per cent. “Financially, the ENPF remains robust, with
contributions consistently exceeding benefits payouts, a testament to the
fund’s health and its ability to expand investment opportunities and grow
members’ funds,” reads part of the report.