- The Government of Tanzania on 17th November 2017 tabled before the Parliament, the Public Service Social Security Fund, Bill, 2017 (“the Bill”). The Bill is proposed for an Act to provide for the establishment of the Public Service Social Security Scheme in Tanzania. The proposed Bill also provide for contributions to and payments of social security benefits in respect of the service of the employees in the Public service. Moreover, the new Act will the existing Pension Funds legislations including, repeal of the Public Service Retirement Benefit Act Cap 371, the LAPF Pensions Fund Act Cap 407, the GEPF Retirement Benefits Fund Act Cap 51 and the PPF Pensions Fund Act Cap372. On top of that, the Bill proposes for the amendments to the National Social Security Fund Act Cap. 50 with a view of specifically remodeling the scheme to provide for social security benefits to employees in the private sector.
- Therefore, upon the enactment of the Bill, there shall be two tier system of Social Security Schemes, namely, the Public Service Social Security Fund under the Public Service Social Security Act and the Private Sector Social Security Scheme under the National Social Security Fund Act Cap. 50
- In this regard, the Bill proposes that, a member who has changed employment from public service to any employer in the private sector his membership shall be transferred to the National Social Security Fund and all employees in the public sector who are members of the National Social Security Fund shall be transferred to the Fund.
Section 18 of the Bill proposes for the monthly contribution to be at the rate of 20% of the employee’s monthly salary. The contribution shall be constituted of 5% from the employee and 15% from the Employer of employee’s monthly salary.
Benefits Payable to Members of the Scheme:
Section 29 of the Bill proposes for the following benefits to be payable to the members:-
- Retirement pension benefit,
- Survivors benefit,
- Invalidity benefit,
- Maternity benefit,
- Unemployment benefit,
- Sickness benefit,
- Death grant and funeral grant.
New Benefits introduced by the Bill:
The Bill has introduced two new benefits which were not granted earlier by the Pension Funds. These are: Survivor Benefit (S. 37) and Unemployment benefit (S.29). Survivors benefits would be paid to the Dependents of the deceased (widow, children or parents of the deceased).
Qualifying Conditions for the payment of benefits:
Section 26 of the Bill proposes for the conditions to be fulfilled by the member before being granted those benefits. The said conditions include: the attainment of the compulsory retirement age of 60 years, attainment of the voluntary retirement age of 55years, medical invalidity and termination of employment for public interest. Unlike the previous Schemes, the Bill does not provide of withdrawal benefit to members
Among the major improvement brought by the new bill is the time requirement for the payment of the benefits to the Members. Section 43 of the Bill proposes the time limit of 60 days for the Fund to pay the employee his retirement benefits from the date of retirement. The Bill proposes a penalty to the Fund upon failure to timely pay the benefits within 60 days a penalty of 5% per annum for the due amount.
The Bill specifically put 60 years as compulsory retirement age and 55 years for voluntary retirement.
The Bill under Section 68 and 69 put a heavy punishment and penalty for noncompliance to the law for a fine between Tanzania Shillings 5 million to Tanzania Shillings 50 Million or to imprisonment between two years and four years.
Vesting of assets and liabilities
Under Section 82, 83, 84 and 85 of the Bill, provide for vesting of assets and liabilities which were under the former schemes to the new Public Service Social Security Fund.
This publication has been prepared for general information on matters of interest only. It does not constitute legal opinion or professional advise. You should not act upon the information contained in this publication without obtaining specific professional advise. No representation or warranty (express or implied) is given to the accuracy or completeness of the information contained in this publication. FIN & LAW does not accept or assume any liability, responsibility or duty of care for any consequences or inconvenience for any consequences of you or anyone else acting or refraining to act, in reliance on the information contained in this publication or any decision based on it.
©2017 FIN & LAW, all rights reserved. FIN & LAW is a highly accredited Corporate and Commercial law firm in Tanzania with affiliation to other law firms across the world.