NSSA board in cost-cutting measures
ABOUT 10 months after firing top earning executives in a shocking crackdown last October that sparked widespread criticism in some quarters, the Robin Vela-led National Social Security Authority (NSSA) board has directed management to slash costs by 25 percent.
The board has also told executives that NSSA would be mutating towards a policy whereby staff would have to drive their own cars.
The new measures came after the board, which came into office in July last year, observed a slowdown in contributions, as hundreds of firms closed down, with serious consequences on the job market.
A forensic audit commissioned by the new board revealed that the axed bosses had gobbled US$2 million each in housing loans over two years, in addition to lavish spending while thousands of pensioners were living in abject poverty.
“The board noted that contributions were declining yet there was no change being proposed by management to operating costs and, in particular, to staff costs to ensure sustainability of the NSSA managed funds,” Vela said in his first quarter report.
“The board reiterated that there was also a need to ensure an equitable balance and alignment between staff costs and benefit payments to pensioners. 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 percent.
“The authority will also move towards a total cost to company model of remuneration provided the allowance component of remuneration does not exceed 40 percent of the total monthly emolument as per the government salary guidelines,” he added.
A number of firms have been closing monthly, and senior NSSA officials have disclosed that this had placed the authority in a precarious position.
As a result, NSSA’s revenues have been declining.
This has made the argument to slash costs even more compelling.
“Some benefits have been discontinued; pension contribution for staff by the authority as employer has been reduced from 18 percent of basic salary to 7,5 percent of basic salary. 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 said.
Also, to mitigate against the risk of people continuing to make claims in the name of dead pensioners, the authority introduced a system under which pensioners have to sign life certificates annually.
These are meant to verify that a pensioner making a claim against the authority was still existent.
About 44 000 pensioners failed to access pensions in April after they failed to sign the life certificates.
NSSA said these had been temporarily de-activated to stop massive abuse of funds, which are now the subject on an investigation.
Vela said the authority had been facing multiple forms of fraud, such as continued withdrawal of pensions by relatives of deceased members.
“During April 2016, a total of 44 000 pensioners, who had not submitted life certificates, did not receive their monthly pension payments,” Vela said in his 2016 first quarter report.
“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.
“Affected pensioners have since had their pensions re-activated. 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.
“A further major challenge for the authority was that pensioners would give automated teller machine cards and access to their bank accounts to their relatives who would continue drawing pensions even after the pensioner’s death,” said Vela.
Follow us on Twitter @FingazLive and on Facebook – The Financial Gazette