Processing of Terminal Benefits of Retirees from the Central and Local Government of Tanzania

Today, Pension payments to retirees have been and continue to be a big problem in Tanzania, which requires immediate attention. Most of old age people who served in the public sector are dependent on the terminal benefits as their major source of income after retiring from public services.
The terminal benefits for the retirees in Tanzania are managed by five different Pension Funds which are Public Service Pension Funds (PSPF), Local Authorities Pension Fund (LAPF), Government Employees Provident Fund (GEPF), National Social Security Fund (NSSF) and Parastatal Pension Fund (PPF).  These Pension Funds are responsible for the payment of pensions, gratuities, and other benefits in respect of the service of retirees.
 
Beyond policy formulation and regulation, Central Government Authorities and the Prime Minister’s Office – Regional and Local Government Authorities as main employers and custodians of Pension Funds are responsible for the way Terminal Benefits are being processed in the country.
 
However, indicative problems discussed in the proceeding paragraphs suggest that there are problems in the processing of Terminal Benefits of retirees. This is following an outcry of many people who have been retiring from public service employment. The purpose of this audit was to assess the efficiency of the Government, Pension Funds and selected Employers on processing terminal benefits of retired public servants in Tanzania. The aim was also, to evaluate the adequacy of systems and procedures in place for managing  terminal benefits.
 
The audit covered three fiscal years i.e. 2006/2007, 2007/2008 and 2008/2009; and focused on two Public Pension Funds namely the Public Service Pension Fund and the Local Authorities Pension Fund administered by the Ministry of Finance and Economic Affairs and Prime Minister’s Office – Regional and Local Government Authorities respectively. Similarly, this audit was carried out in three selected Ministries out of 29 and 17 LGAs out of 133 of various sizes, population and with reasonable accessibility. These are samples of the main employers of the public servants and in which case all of them have a role to play in  processing terminal benefits in Tanzania.
 
The above Ministries and LGAs have been selected due to the fact that they have a large number of Public servants and the rate of retirement is considered to be high compared to other Ministries and LGAs in Tanzania.
Major Findings and Conclusions
The audit disclosed that the main employers i.e. Ministry of Finance and Economic Affairs (MoFEA) and President’s Office – Public Service Management (PO-PSM) being the overall overseers of Pension Funds on behalf of the Government have not to a large extent fulfilled their responsibilities of ensuring the processing of terminal benefits of retirees on time and without recourse to duress. Specifically, the audit noted that there is increasing number of retirees waiting processing time.
Together with that, other issues noted are:

• Pension Fund’s system of keeping records is appallingly inefficient and ineffective this is due to poor record keeping by Pension Funds,
• The processes to finalize terminal benefits of retirees continued to be problematic which in consequence hinders the retirement system’s ability to fulfill its mission and inordinate delays in processing retirees’ benefits.
• This problem can be addressed by revamping the existing pension system in the country.
• There is lack of clearly defined awareness programs by the two main employers (The MoFEA and PO-PSM).
• Employer’s system of keeping records is appallingly inefficient and ineffective
• The Employers failed to properly manage and control the necessary documents for the processing of retirement benefits of their respective employees resulting in reciprocal delays and trading of blames between the Funds and the employers.
• In addition, MoFEA and PO-PSM as main Employers have not taken any tangible action to ensure efficient processing of terminal benefits is instituted despite the fact this is a known and repetitive problem throughout the period of the audit i.e. 2006/07 to 2008/09.

Based on the audit findings and conclusions it is being recommended that:
PSPF and LAPF should review the processing of terminal benefits of retirees’ workflow. This includes preparation of a Client Service Charter which will incorporate all core activities and the whole process of terminal benefits indicating exact time a certain activity is going to be initiated and completed and identify who will be accountable for what. Communication should be improved among stakeholders to ensure timely communication between the funds and employers. The Pension Funds should also, create awareness to their members
including conducting training on pension matters.
MoFEA and PO-PSM as Main Employers should ensure that proper records of employees are accurately kept and submitted to Pension Funds for processing terminal benefit  payments, there is a clear coordination among stakeholders and an improved coordination among the key stakeholders including transferability of benefits in favour of those who are paid by LAPF and PSPF and have serboth the Local Government Authorities and the  Central Government. 
Likewise, Employers should prepare a schedule of employees who are about to retire in the near future at least have a three years’ schedule. This schedule should be used as a basis for reminding employers on the date of retirement of staff, when to notify staff on their retirement dates, and also the right time to look for the necessary documents. This will ensure timely access to information for efficient decision making on terminal benefit matters.
 
In addition, employers should ensure that monitoring, evaluation and feedback mechanism for the training conducted on staff awareness on pension matters is done. Through this, it will be easier for the employers to identify areas that need to be addressed for future improvements.