NSSA to stem benefits abuse and fraud; looks at introducing fund for informal sector

nssa yakanaka

NSSA has started a process of auditing the payment of benefits on an improved, multiple verification based and frequent basis.

THE National Social Security Authority has said beneficiaries will now be required to physically verify their eligibility for funds as part of efforts to ensure that benefits are only paid to deserving and entitled beneficiaries while it is looking at introducing a fund/ social security offering for informal sector voluntary contributors. 

In an update for the first quarter, chairman Robin Vela said the authority had started a process of auditing the payment of benefits on an improved, multiple verification based and frequent basis. This will be done mainly through the adoption of a biometric information system and the continued issuance of Life Certificates.

“Biometric equipment has been delivered and NSSA will start the process of inputting pensioners biometric information in the system while beneficiaries will be required (on a period basis) to attend a NSSA facility, in person, to enable verification of their eligibility. This process will assist greatly in removing from the benefits register all undeserving recipients of NSSA funds,” said Vela.

He however noted that even though NSSA had continued to verify the beneficiaries through the issuance of Life Certificates, a total of 44,000 pensioners, who had not submitted Life Certificates, did not receive their monthly pension payments.

“Life Certificates are a critical part of a verification system to avoid abuse, potential fraud and to maintain the integrity of the pension system. Unfortunately some pensioners did not respond to the call, made through various media channels, to come forward and submit their certificates as proof that they are still living.”

Vela said affected pensioners have since had their pensions re-activated but going forward NSSA will seek ways to reach out via all available channels to members and pensioners.

“The challenges with Life Certificates submissions notwithstanding, NSSA will continue to consistently pay out pensions when they fall due.”

He noted that a further major challenge for NSSA was that pensioners would give ATM cards and access their bank accounts to their relatives who would continue drawing pensions even after the pensioner’s death.

“However the public is reminded that it is a criminal offence to access pensioners’ benefits whether they are still alive or deceased. NSSA continues to investigate and prosecute offenders.”

NSSA is looking at embracing the mobile banking and other technology to pay pensions.
“Mobile operators have been engaged to provide use of their platforms for the payment of benefits at pensioners’ convenience and at reasonable transaction costs. It is hoped that the engagements with the mobile operators will remove the need for pensioners to travel long distances, at great cost, to collect their pensions.”

Vela however said that the ability to deliver its services through a mobile telephony platform at affordable rate is a soft issue benefit to the Authority’s interest in gaining an equity stake in Telecel Zimbabwe.

NSSA supported ZARNet in concluding the funding of the purchase of Telecel International Limited, which holds 60% of Telecel Zimbabwe Limited. The amount advanced is not a loan to ZARNet but is a quasi- equity participation funding which gives the equity control of Telecel International Limited to NSSA until certain conditions precedent are met by ZARNet.

Vela said that a formal binding agreement has been signed in relation to the transfer of rights in the TZL shares from ZARNet to NSSA, giving NSSA effective control over 60% of Telecel Zimbabwe. The conclusion of the purchase agreement now awaits the payment offshore of the purchase price which is currently in a local trust account of a nominated legal firm.

He added that the cash-flow generation capacity of Telecel Zimbabwe to supplement NSSA’s investment income; the entry price giving protection of capital value; and the strategic nature of the entity for elements such as offering new social security products and pension payments were too compelling for the authority to pass over even given the current cash constraints of the Authority.

“In all circumstances, NSSA will emerge as a significant equity holder in Telecel Zimbabwe Limited.”

Vela said the board had approved an interim remuneration framework which will result in a monthly reduction of staff costs to the Authority of at least 25%.

Some benefits have been discontinued and pension contribution for staff by the authority as employer has been reduced from 18% of basic salary to 7.5% of basic salary.

“The board has since approved (and implemented on 1 April 2016 after negotiation with stakeholders) an interim remuneration framework which will result in a monthly reduction of staff costs to the Authority of at least 25%.

“NSSA will also move towards a total cost to company model of remuneration provided the allowance component of remuneration does not exceed 40% of the total monthly emolument as per the Government salary guidelines” he said.

The employee defined benefit pension scheme has been closed to new members in favour of a new defined contribution scheme; and company cars have been discontinued in favour of a vehicle ownership scheme.

Vela also said NSSA has sought further investigative work to be carried out on certain prior investment transactions of the Authority. Such additional work is to be carried out by an independent auditing and investigative firm.

“The Authority is required under the Public Finance Act to have such work conducted under the oversight of the Auditor General’s Office. The appointment of the firm has now been concluded and work on the investigative exercise will commence during this quarter. FinX

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