Zanzibar Social Security Fund (ZSSF)

INTRODUCTION

Putting into consideration how vital is the question of Social Security; the Revolutionary Government of Zanzibar has been implemented this great responsibility by taking the following steps. Establishment Act No.15 of 1986-The Workmen’s Compensation Act, Establishment Act No. 4 of 1988- The Retirement Benefit Act which has been amended by, Establishment Act No.1 of 1990- The Pensions (Political Appointees), Establishment Act No.2 of 1990- The Pension Act and Establishment Act No.2 of 1995- The Zanzibar Trading and Consumer Protect Act. A discrepancy between different acts ahead of ZSSF is that they solely benefited Public sector workers (Manyalla, I. J. 2011).

DEFINITION OF KEY TERM

Social security is defined as the protection provided by society to its members through public measures against the economic and social distress which otherwise would be caused by the stoppage or reduction of earnings arising from contingencies (Haule et al 1994).

Social Security is a basic right for every citizen wherever he/she resides in accordance with the United Nation Human Right Declaration of 1948. Its implementation was followed up with ILO Social Security No. 102 Declaration of 1952 (UNHRD 1948).

YEAR OF ESTABLISHMENT
Generally Zanzibar Social Security Fund has been established under Act No. 2 of 1998 as amended by Act No. 9 of 2000 and amended by the Government Notice of 2004 and eventually re-appealed and re-enacted ZSSF Act No.2 of 2005 Act No. 2 of 2005 (ZSSF Audited Accounts, 2007/2008, 2008/2009 and 2009/2010).

VISION

Zanzibar Social Security Fund (ZSSF) seeks to be a leader and model social security provider in the Region.

 

MISSION

ZSSF is dedicated to be a dynamic provider of social security benefits through the utilization of competent and motivated staff.

CORE VALUES

The fund will provide services to its members and the general public on the basis of, Integrity and prudence, Quality, Transparency, Initiative, Respective, Accountability, Trust and teamwork and Equal opportunity service provider.

OBJECTIVES AND FUNCTIONS OF ZSSF

Under section 5 of ZSSF Act No. 2 of 2005 ZSSF shall have the following functions:

• To receive all the contributions and other moneys which are required to be paid into the Fund.
• To keep and maintain register of all members and employer contributing to the fund and any other register that the Board may advice.
• To establish and maintain record for each member in respect of all payment made by way of contribution.
• To invest the money collected in any viable venture as the Board may consider appropriate.
• To operate and operate its own bank account on condition set by the Board
• To pay benefits to members or their dependants in accordance with the provisions of the Act.
• To manage and administer the contribution in accordance with the provision of this Act.
• To obtain the services of any person or institution private or public, to perform any specific act or function.
• To engage in any activity whether alone or together with other organization in Tanzania or elsewhere, to promote proper, efficient and effective social security administration.
• To do all such acts and thing and to enter into all transaction as in the opinion of the Board may be necessary for the proper and efficient administration of the Fund.

TARGET GROUP

The target group of this Fund covers employees from all sectors of the economy (Government, Private Sectors and Parastatal).

ENTRY CONDITIONS

An individual to be enrolled in ZSSF should be an employee from all sectors of the economy, Government, Private Sectors and Parastatal.

MEMBERSHIP MODERITIES OF CONTRIBUTION

Each member is required to contribute 15% of the salary of which the employer contributes 10% while the employee contributes 5%. Contributions are remitted monthly to ZSSF. The law has given the employer a grace of period of 15 days after end of each month.

DURATION OF BEING PENSIONABLE

The qualifying period for benefit is sixty months of contributions after attaining the qualifying conditions for benefit.

TYPES OF BENEFIT AND ITS TIME OF OFFEING

OLD AGE BENEFITS

Old Age (Retirement) Benefit, is one of the long-term benefit offered by ZSSF paid to a member who attain retirement age and retired. The voluntary retirement age is 55 years and compulsory retirement age is 60 years for both male and female members. Old Age Pensions include;

Gratuity

This is benefit (lump sum) paid to a retired person who attained the voluntary retirement age (55 to 59) years or compulsory retirement age (60) years and has also contributed to the Fund for a minimum period of 60 months.

Old Age Pension

These are benefits paid to a member at the end of each month since retirement until he/she die.

SURVIVORS BENEFIT

Provided only if a member is deceased before retired age and pension, which Survivors Benefits will be paid to the heirs. Survivors Benefits will be all benefits due to the deceased member, provided that the Fund will deliver the Survivors Benefits to the religious institution to which the member belonged for the purpose of being shared among his/her inheritor.

DISABILITY (Invalidity) BENEFITS

Disability benefit is one of the long-term benefits offered by the Fund paid to a member who lost the ability to work due to physical or mental disability after the state certified by the Board of Physicians. Disability benefits include;

Gratuity

Invalidity gratuity is a lump sum amount paid to a member who contributed for a period not less than 60 months and lost their earning capacity due to physical and/or mental disability. 

Disability Pension.

This is monthly payment to the member upon ceases employment on Medical Board's recommendations basis to the rest of his/her life.

MATERNITY BENEFIT

Maternity benefit, a female member shall be entitled to maternity benefit once in every three years.

MEDICAL BENEFIT

COVERAGE AND SUCCESS

All employees excluding political appointees who are covered under Act No. 1 of 1990 Specified State Leaders under Act No. 4 of 1988 as amended by Act No. 7 of 1995, Armed Forces and Police Personnel.

SUCCESS

The Fund have succeeded to obtain available net assets  from TZS 43.7 billion in the year ended 30th June 2007 to TZS 67.9 billion by the year ended 30th June 2010 representing  

a growth rate of 55.4 percent (ZSSF Audited Accounts, 2007/2008, 2008/2009 and 2009/ 2010). The growth of the fund’s net assets available for benefit payment mainly resulted from rising member contribution which grew from TZS 6.1 billion at the end of 30th June 2007 to 11.8 billion by the end of 30th June 2010, and investment income which rose from TZS 4.8 billion to TZS 6.4 billion (ibid).

Increased number of employers from 613 during the year ended 30th June 2007 to 845 employers in the year ended 30th June 2010, representing an increase of 37.8 percent. The number of employee members rose from 48,938 at the end of 30th June 2007 to 59,161 members in the year ended 30th June 2010 marking a 19.8% increase (ZSSF Audited Accounts, 2007/2008, 2008/2009 and 2009/2010).

ADVANTAGES

Contributions rate, the rate of contribution is low and affordable to the member with low income where by only 5% percent of the salary is needed to be as a part of the member’s contribution and employer is required to contribute 10% so as to make a total of 15% of contribution.

Qualifying period, qualified period required for a member to be recognized and having rights for afore mentioned benefit is only 60 months which is equal to five years after being enrolled.

Benefit provided by ZSSF is paid immediately after member completes the relevant procedures.

Payment takes place between ZSSF and responsible member and not through employer, other institutions or anyone else.

ZSSF benefit do not discriminate; is provided to all members, nationals and non nationals of Tanzania, as stipulated in the United Nations Declaration on Social Security.

Payment of Benefits information is confidential between ZSSF and member, or beneficiary's payees.

CHALLENGES

The Current challenges facing the social security sector include;

Delays in payment of Contributions by the employers, sometimes employers delay to send the contribution of the employees to the security fund. It is agreed that the employers should not send the contributions of their employees beyond 15^thday after the begging of the new month. But still exceed 15^thday of the month to some employees.

Pre-mature withdrawals, members within the ZSSF withdraw from membership due to different problems/factors. This is still a challenge facing ZSSF.

Low yields on Treasury Bills and Treasury Bonds as compared with the level of inflation, this is one among the challenge of ZSSF in such a way that they receive low yields on treasury bills and treasure bond although there is inflation that made them become difficult to run their activities.

Delays in the process of benefit claims

Inadequacy of benefits

Limited areas of investments, Zanzibar Social Security Fund (ZSSF) had invested on few areas such as Real estate ,Equity ,Government securities ,Fixed deposits, Loan ,Emerging Markets but these areas are not enough to generates enough profit for the funds, so the must extend their investments in other areas such as buildings, infrastructures, mining, in social services such as, in education, health and power generation.

Change of operating environment due to the coming of the Social Security Regulatory Authority (SSRA), the establishment of regulatory authority which has a great role on controlling this social security fund has enacted some difficult conditions which hinder the operating environment of this fund especially in fund development.

Introduction of Occupational Schemes, occupational social security schemes limits the freedom of employees to join in other social security funds including ZSSF for instance local government employee are required to join in LAPF as the law demand them to join, so workers fail to join in other social security funds because they have occupational schemes that’s limits their freedom.

Low coverage of the informal sector, the funds mainly based on formal sector of the economy rather than informal sectors where the majority of people are employed in this sector, this made the fund to have low number of new member to join in the funds, so employees in informal sectors such as farmers, pastoralist, small businessmen, fisheries as well as politician are less considered.

WAYS FORWARD OF ZSSF

To increase area of coverage, to increase the coverage of the fund all over the country will expand the market as well as increase number of its member, for instance ZSSF is based only in Zanzibar where the population of people is very low and the completion with other social security fund is very high.

To increase investments ,for stance ZSSF invested on Real estate ,Equity ,Government securities ,Fixed deposits, Loan ,Emerging Markets but this areas are not enough to generates enough profit for the funds, so they must extend their investments in other areas such as buildings, infrastructures, mining, in social services such as in education, health.

Payment benefits should base on life expectance of the county, for instance in Tanzania life expectance is 45 years of age. Many members are not benefiting with the payments benefits because some of them died before the age of 60years where this fund provides old age pension, so once payment benefits will be paid according to country life expectance this will make members to benefits before their death.

Payments of benefits claims at a time, payment of benefits such as old age pension should be paid at time, this will motivates more people to join in to the funds because many social security funds use long time for its member to get their old age pension.

CONCLUSION

Government policy, legal and financial support have focused on large scale to formal social security schemes such as the NSSF and PPF but there is no expressive programme on social protection of people outside the formal sector. Such thinking has continued to dominate policy maker and thus continue to be a threat to non-formal social security development.

REFFERENCES

Haule, D., Mallya, C., and Omari, K. (2002), “Journal of Social Development in Africa

       Vol. 17” Oxford University Press.

ZSSF, (2007/2008, 2008/2009 and 2009/2010), Zanzibar Social Security Fund Audited

       Accounts, Darajani Printers, Zanzibar.

Manyalla, I. J. (2011), Risk management in Tanzania “experiences and challenges

         In the social security sector” Brain Capital Excellence Ltd, DSM.

UNHRD, (1948), “Sustainable Public/Private Partnerships for Public Service Delivery.”

           Natural Resources Forum, Vol. 22, No. 3, (1998) pp. 193-199, Elsevier Science

            Ltd, Great.

Written by Ausi  R. Chiwambo (June, 2014)

Tefilo Kisanji University

chiwambo@hotmail.com

0753110740