THE proposed Eswatini National Provident Fund (ENPF) conversion would reduce contributions to the Public Service Pensions Fund (PSPF) for new civil servants when they join ENPF.
PSPF Chief Executive Officer (CEO) Masotja Vilakati shared this during the entity’s 6th Stakeholder Engagement Forum at the Hilton Garden Inn recently. He was sharing on the impact of a reduction in the PSPF contributions.
He said should the conversion be implemented; there would be decrease in contributions, which in turn would worsen their deficit to an estimated E2 billion in five years.
Vilakati added that the conversion went against the Pensions Order, widened the negative gap between contributions and benefits paid and sold investments.
He said the reduction of PSPF contributions would result in reduced benefits, which was not legally supported, widens the deficit and negatively affected PSPF financial sustainability towards closure.
“The reduction in contributions will also limit the impactful domestic investments currently happening. In a few years, as current members retire all civil servants will become ENPF members, thus PSPF reduced contributions becomes permanent.
“Other impacts would be on the financial health of PSPF, including requirement of government bailout, thus affecting taxpayers. Another issue is affordability to fund the huge deficit amount in question; if government cannot pay E100 million per year as additional contributions to ENPF and it also creates administration complexities and double administration costs; two schemes for the same 20% contribution,” he said.
The CEO emphasised that PSPF supported the conversion of ENPF from provident to pension for its (ENPF) members, excluding civil servants because government would not contribute additional funds.
He said the civil service was excluded from ENPF in 1974 as they were catered for under the Pensions Order and later the Pensions Order 1993, the conversion should thus exclude them.
Vilakati said including civil servants and reducing PSPF contributions made members worse off as their pension rights were protected by both the Pensions Order and the Constitution of the Kingdom.
He said the norm across many countries in Africa was that national pensions and public service pensions were run separately and independently, and both actuaries concurred that ENPF conversion was viable without the civil service.
He said the Trade Unions Congress of Swaziland (TUCOSWA) was of the understanding that PSPF would not be affected by inclusion of civil servants, contrary to the gazetted Bill.
“The ENPF Bill precludes double benefitting from two public schemes, this clause is likely applicable only to PSPF members, then why include them? Inclusion of civil servants (if at all) must be an addition and with no interruption to PSPF like the other private sector employers that offer occupational pension funds.
“Government must commit to this and include it in the ENPF Bill. Clause 107 of the Bill must be rewritten to provide this assurance and clause 3 must be reviewed to exclude government as an employer, exclude employees in the service of government. Clause 69 must clarify the clause in simple language to avoid ambiguity of members contributing for 15 years, only to be disqualified from benefitting at retirement and there should be a distinction between an occupational scheme versus a statutory fund such as PSPF,” he said.
Meanwhile, PSPF Director Operations Jethro Ndlangamandla outlined their reservations with regards to the ENPF conversion.
He emphasised that they were not against the conversion, but only what some parts of the proposed Bill meant for PSPF’s operations and growth.
Drawing inspiration from Samuel 2 Chapter 12 to drive his point home, he likened the proposed conversion to a wealthy man taking his poor neighbour’s only livestock to prepare a meal for a visitor whereas he had many.
He noted that the ENPF had over 140 000 members, excluding civil servants, whereas PSPF had over 63 000 members.
Should the conversion happen, he said the ENPF Bill of 2025 would allow new civil servants to contribute to ENPF, which he said would decrease contributions to PSPF by up to 10% of basic salary.
