The conversion of the Eswatini National Provident Fund (ENPF) into a pension fund has raised significant concerns among financial experts, who caution that the structural shift can destabilise the country’s retirement system and expose government to substantial unfunded liabilities.
At the heart of the debate is the fundamental difference between the two pension models. ENPF operates as a defined contribution (DC) scheme, where benefits are determined by individual contributions and investment performance. PSPF, on the other hand, is a defined benefit (DB) scheme that guarantees pensions based on salary and years of service. It places long-term financial obligations on the fund and, by extension, the state.
An expert, Sandile Mbhamali, has highlighted the risks associated with the proposed conversion.
“This is not a merger, it’s a fiscal collapse in the making. You cannot absorb a DC fund into a DB structure that’s already carrying a multi-billion Emalangeni deficit without triggering systemic risk,” he said.
According to recent valuations, PSPF is facing an actuarial deficit of approximately E10 billion. Mbhamali noted that integrating ENPF contributors into this environment without protective measures such as ring-fencing reserves or recalibrating actuarial assumptions could deepen the deficit and compel government to recognise shortfall on its balance sheet under international accounting standards.
“This is not just a pension issue, it is a sovereign risk. Every shift in interest rates, every change in mortality assumptions, will reverberate through the state’s financial statements,” he argued.
Governance has also emerged as a key concern. Mbhamali pointed to the lack of transparency in the conversion process, citing the absence of published actuarial valuations and stakeholder consultations. He emphasised the need for governance reform alongside pension reform.
The expert also flagged the possibility of intergenerational inequities, warning that younger contributors could be required to subsidise older pensioners without their consent.
“The stakes are enormous. This is not just about pensions, it’s about the future of Eswatini’s public finance.”
To mitigate potential risks, Mbhamali proposed several safeguards:
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Independent actuarial audits of both ENPF and PSPF
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Ring-fenced reserves to protect ENPF contributors
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Hybrid models that retain DC principles while offering conditional DB benefits
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Automatic funding triggers to adjust contributions or benefits in response to deficits
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Board-level oversight with actuarial, investment, and audit expertise
