The Lusaka City Council has called on the Government to extend the lifespan of the Local Authorities Superannuation Fund (LASF).
The Council is also in support of the proposed amendments to the pensionable age because it provides for an option as a member attains 55 years.
Speaking when he appeared before the Parliamentary Committee on Economic Affairs, Energy and Labour, chaired by Siavonga Member of Parliament (MP) Kennedy Hamudulu in Lusaka on Monday, Lusaka Town Clerk Alex Mwansa proposed that the provisions of section 13(2) of the National Pensions Scheme Act should be evoked to enable LASF start receiving new members as a matter of urgency.
Mr. Mwansa proposed that the government should meet the accrued benefit liabilities for retirees under LASF and advised that the solution remained in opening up LASF to new members to guarantee financial sustainability.
He also suggested to the Parliamentary Committee team that included MMD Lunte MP Felix Mutati, MMD Lea-Lui MP, Dr. Situmbeko Musokotwane and PF Nchanga MP, Wilbur Simusa, that any changes to the existing Act should not be detrimental to both contributing members and employers.
“On the annuity, our position is that the amendment to this section will be detrimental to the retiring members as the proposed rates will be lower, considering the extended pensionable age.
Further, it is a known fact that in Zambia, the life expectancy age is 37 years and chances of ill health are high. Based on this, if a member exceeds 55 years of service and then dies, such member may forfeit the benefits to be calculated normally and will instead be based on this reduced rate,” he said.
The Town Clerk indicated that the new rate will result in considerable reduction of the pensionable emoluments of the contributing member if increased to seven hundred and twenty (720) from the current six hundred and sixty (660).
“Members may wish to note that the current annuity paid to a retired member is a flat rate of K500.00 per annum regardless of one’s position at the time of retirement. In other words, to put it in plain language, a person who retired as Town Clerk or Driver is receiving the same annuity. This is a sad development,” Mr. Mwansa told the committee.
He said the proposed rate will drastically reduce the meagre current K500.00 to an insignificant figure.
Mr. Mwansa recommended that rather than increasing the annuity rate to the proposed 720, Parliament should work on improving drastically on the current 660 to be in line with other pension schemes.
He recommended that the Minister should after consultations with LASF, employer and employee representatives respectively, and based on an actuarial valuation undertaken by statutory instrument, prescribe the rate at which a retirement benefit is payable.