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The Evolution of Security Systems in Tanzania


By Rayner Ngonji, Sunday Observer


May 27, 2007


Current pension rates are extremely low and do not meet the intended goals of pensioners, namely, to enable a retiree to sustain an acceptable standard of living.

The ordinances that have been put in place in an effort to improve the situation are outdated in view of the changing circumstances and dictating imperatives.

Pensioners Union of Tanzania (PUT) says in its study report that the economic and social changes worldwide and particularly in Tanzania have eroded the perceived benefits under the Ordinance.

The advent of trade liberalisation, the emerging free market, inflation and currency instability have negatively impacted on the benefit of retirees.

That the ordinance remained operative for such a long time is a matter of speculation.

However, the repeal of the ordinance and enactment of new legislations in 1999 came as a relief to public servants and to political leaders as well.

But, it is unclear why these legislations excluded the pre - 1999 retirees.
The plight of the retirees is further exacerbated by the rapid changes in the social political and economic environment, PUT says in its report.

The traditional security has been eroded by the disintegration of the family structure.

The young are moving from rural to urban areas in search of salaried jobs, while those in domicile in urban centres move to other centres where opportunities are better.

In fact the urban life epitomises the disintegration of the traditional community.

Additionally, the incidence of HIV/AIDS pandemic has impacted negatively on the elderly persons. The disease is prevalent in the young to middle age group who are the real backbone of the community.

This group, PUT notes, is the workforce and the bread earners. With the weakening and eventual casuality of this group, orphans are on the increase and relying more and more on the elderly (grand parents) whose ability to earn income is either limited or non-existent.
In the case of retirees whose incomes are meagre, the situation is extremely oppressive.

The rising cost of living fuelled by inflation and the decline in value of the Tanzania shilling has a telling impact on the retirees.

With the income of 20,000/= per month, the family of a retiree cannot live comfortable for one week.

This situation is further compounded by the factors sited above i.e. disintegration of family values and increasing number of survivors of AIDS victims.

It`s against this background that PUT decided to carry out a study to establish how best retirees welfare could be improved.

PUT is an NGO whose broad mission is to sensitize the society on the status of the elderly particularly retirees from the public and private sectors, provide platform for them to share experiences and advocate their rights.

The study, aimed at providing a road map for the betterment of the benefits of the retirees, focused on the plight of retired civil servants particularly those who fall under the Pension Ordinance of 1954.

Old age with its attendant physical and social changes unleashes broad based decline in wellbeing of many elderly people.

PUT is concerned that these age--induced changes, such as decline in bodily wellbeing, material wellbeing, freedom of choice, security and social wellbeing, can quickly lead to destitution if no mitigation measures are taken.

The pre-1999 pensioners fall in the category of social groups that are highly vulnerable and therefore there is a need to articulate their status and suggest measures that could be taken to minimize their hardships.

In the colonial era families used to provide the traditional social security system world wide. A family was closely knit unit, which catered for all members, young and old according to needs of the age group.

In old age, the young and the able bodied members of the family ensured that the elderly needs were met in a manner commensurate with the resources and economic status of the community.

There were no destitutes in any meaningful way. At the beginning of the industrial revolution, during the 18th century, the business and industry landscape were dominated by family and owner-run entities.

Under these circumstances the social security system continued to be more or less the same as before the industrial revolution.

However, during the 19th century, industry and trade developed rapidly, professional management emerged, and skilled workers were in demand for various specialized tasks in commerce and industry.

The family dominated businesses declined and the values associated with such business disappeared. Skilled workers of diverse origins replaced family members.

As the nature of society changed the employer (owner) and workers (employees) forged new relationships.

Increasingly the relationship between employer and employees became negotiable. That skilled and experienced workers cannot be created overnight became evident.

This self-evident fact prompted employers to retain workers for a long time in order to promote productivity. Retaining workers entailed provision of incentives.

Gradually social security schemes to cater for welfare of retirees after long service with the employer came into existence either voluntarily or through trade union pressure.

Workers social security systems introduced in colonies were modelled on the schemes obtaining in the home countries of the colonial powers. It was such schemes that were extended to Tanzania by the British colonial power.

The first welfare scheme for workers was introduced in 1924 in the form of the Master Native Servants Ordinance of 1924. It provided for rudimentary forms of workers welfare and protection mainly for plantation workers.

The PUT report says political and labour unions driven legislations were introduced in the 1950s. The Employment Ordinance of 1955 covered the private sector workers. The Pension Ordinance of 1954 was introduced for the government workers.

This Ordinance was an improvement of earlier legislation, the Pensioners Ordinance of 1932. The low ranking non-pensionable government workers were catered for by the government employees` provident fund of 1942. While the pension scheme was non-contributory the provident fund scheme was contributory.

The government of independent Tanzania inherited the form and style of the welfare schemes, which were left behind by the colonial power, namely non-contributory pension scheme and contributory provident fund.

The provident funds were run by individual enterprises in the private sector save for the Government employees.

The Government of Tanzania, conscious of the needs of the times, introduced a structured and formal social security system in 1964 and enacted the National Provident Fund Act of 1964 which was superior to previous schemes and offered better benefits the report expounds.

A new era had truly begun. Several acts followed aimed at improving the benefits of the workers in the public sectors namely the Parastatal Pension Fund launched in 1978 and Unified Teachers Services (UTS) scheme.

While the PPF was contributory UTS was not contributory. The 1990\'s ushered in an era of radical departure in the structure and style of social security schemes in an era of radical departure in the structure and style of social security schemes but they remained sectoral, occupationally-oriented and were based on employee-employer contributions.

The main schemes are the NSSF, PPF, LAPF, Teachers Service Commission and PSPF. Each successive scheme aimed at betterment of the benefits of the beneficiaries in recognition of the imperative of the times.

Most of the civil servants who served under the first phase through to the first term of the third phase government of the CCM Government were covered by the Pensions Ordinance, 1954.

The current retirees whose benefits fall under this ordinance served during that period.

The pension scheme was non-contributory. It also provided for retirement at 50 and 55 years for voluntary and compulsory retirement respectively.

The ordinance provided a formula for the calculation of pension benefits. Survivors\' benefits were also acknowledged.

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