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Inflation Wipes Out Pensioners Income

 


As the nation tries to come to grips with economic hardships, many pensioners are destitute.

Inflation has eroded the value of their pensions so much that most now rely on handouts. Some pensioners have even stopped collecting their payouts. The bus fare to collect the money is more than what is paid.

Most of those in destitution have pensions ranging from ZWD $900 (1000 Zimbabwe Dollars = $1.25 USD, GAA) to a maximum ZWD $90 000 a month. These pensions cannot match escalating prices, being pushed by inflation, which has reached a staggering 455 percent.

Mrs Lillian Matangaidze (60) a widow receives a ZWD $2 450 monthly pension from her late husbands' scheme managed by National Social Security Authority.

She cannot even buy a bottle of cooking oil or, worse still, buy her monthly supply of antibiotics for her arthritis, which continues to worsen by day.

She has since stopped collecting the cheques, as the money she has to use for bus fare is much more than her pension. "Its no use, the money is too little," she says resignedly.

Mrs Matangaidze considers herself lucky because she lives in the rural areas, unlike thousands of pensioners in the cities today who, are living from hand to mouth.

Mr Poison Ngorovhani of Rugare, Harare , gets a monthly pension of ZWD $1 745 after having worked for the National Railways of Zimbabwe, for 36 years. "When I retired in the late 1990s I got a retirement package of ZWD $9 000, for all these years that I worked for the company.

"The money that I am currently getting is not even enough to meet city council's monthly rent of over ZWD $5 000. Ndirikutambudzika (I am suffering)," he said dejectedly.

The plight of his friend, Mr Gibson Mavai, who also worked for the NRZ for more that 20 years, is more desperate. "NRZ deposits my monthly pension of ZWD $1 745 in my bank account, but part of the money is swallowed up by the ledger fees and other bank costs, leaving me with ZWD $1 000. I usually go back home by foot after drawing the money, so that I can save something."

Another pensioner, who retired after working for 20 years for a plastic manufacturing company, Mr Douglas Dumba, regrets taking early retirement. His pension is a paltry ZWD $1 500 from NSSA, which he says is a mockery, as he cannot even afford to pay rent for his four roomed house in Kuwadzana 4.

He cannot meet his medical expenses and dietary needs after being diagnosed with ulcers.

Faced with a bleak future, pensioners in urban areas now survive by subletting their rooms, engaging in urban agriculture and vending, while those in rural areas have turned to gold panning and subsistence farming.

Most pensioners are irked by the fact although prices are increasing rapidly, pension firms have done nothing to increase penions.

NSSA general manager Mr Amond Takawira said inflation had smashed purchasing powers of most pensions and and those from his organisation were no exception.

But the benefits from NSSA were favourable compared to most other schemes.

Benefits are affected by the contributory period, which at the moment is still low. "While employee contribution rates to other pension schemes range from 7,5 percent to 15 percent of the employee's salary, in NSSA the rate is fixed at 3 percent of the insurable earnings with a ceiling that is reviewed periodically but set very low. Currently it is pegged at only $48 000 per month."

NSSA retirement pensions ranged from ZWD $777 to $34 380 whilst invalide pensions ranged from ZWD $337,50 to a maximum of $6 715. Survivors' pensions, based on retirement pensions, ranged from ZWD $337,50 to $13 752.

NSSA pensions were being reviewed with an increase expected once the actuarial valuation had been completed.

An economist, Mr David Mupamhadzi, said the surging inflation had had a serious impact to people with fixed incomes. "Most pensions and other forms of fixed incomes have lost value and will continue to do so owing to inflation.

"As a result most employees are now reluctant to rely on pensions, as was the case a few years back, where one would stay with one company for 10 years in view of accumulating a sizeable pension," he said.

Because of the high levels of uncertainty surrounding pensions, many employees no longer stayed in the same employment for too long.

"Pension is no longer an incentive to any employee who is serious about life," says Nesbert Siriro a stores controller with a company which specialises in irrigation equipment.

One of the many ways that the Government could assist pensioners and other people with fixed incomes would be to come up with policies that ensured companies reviewed pensions in line with inflation..

The Government could implement a policy similar to that of insurance companies where premiums were constantly increased to match inflation.

Insurance companies, after realising the danger of having people's earnings being eroded by inflation have put in measures to add a certain percentage of the monthly contributions as an escalator to guard against such a situation.

Although the percentage might not be high enough to beat the inflation, it could cushion the contributors.

Mr Mupamhadzi urged companies to invest pension funds so they could realise attractive profits, which in turn would be paid to pensioners.

"Some pension firms are failing to make proper payments to pensioners because the money was not properly invested. There is need for policy makers to scrutinise operations of some pension firms in the country," he said.

For several decades pension funds have been forced to invest significant percentages of their income in Government bonds. These provide absolute security, but the returns are traditionally lower than shares or property.

Although the living conditions of pensioners were deplorable in Zimbabwe , this was not the case some countries.

The United Kingdom has a number of programmes for pensioners that ensured a decent and secure income in retirement.

It had set up successful partnerships between central and local governments and the voluntary sector to improve lives of pensioners through provision of heavily subsided accommodation, food and entertainment allowances.

Pensioners in the UK have free access to health care facilities. With the money they get as monthly payouts they can actually afford to go on a holiday, something that Zimbabwean pensioners cannot afford.

A situation closer home is that of Botswana , South Africa and Namibia , where they have in place a non-contributory social pension for their elderly citizens.

A report by the UK based Institute of Development Studies compiled this year showed South Africa had over 1,6 million social pensioners, each receiving R600 (US $60) per month.

Namibian pensioners had 85 000 pensioners each receiving a much lower figure at N$ 250 (US $24), compared to Botswana's 110 pula (US $17), which is paid to 80 000 individual social pensioners each month. In both South Africa and Namibia , the social pension is funded directly from the national budget and financed through tax revenues. It is a state guaranteed social security payment that is not funded from workers' contributions.

Apart from pensioners themselves, the social pension supports unemployed adults, young grandchildren and other relatives.

It had also contributed to high numbers of 'missing middle generation' households in rural communities. Zimbabwe would need to implement similar programmes to ensure that pensioners do not suffer in retirement.


Copyright 2002 Global Action on Aging
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