Mbangu Mutenda
In examining the draft Regulation RF.R.5.10., allow me to put my thoughts from a citizen and layman’s view.
Firstly, I think as a country, we should appreciate our current peaceful environment, together with the level of our economy.
Our pension funds administrations in the country deserve to be commended not only for stability, but also for the reliability and peace of mind enjoyed by citizens. It is almost guaranteed that once there is a loss of employment resulting from any cause, a deserving individual will have access to pension funds.
The gesture and legislation that requires government and various employment institutions to provide pension funds to its employees is commendable and deserve to be recognised.
As a proponent for the reviewing of legislation to suit the current environment, the addition of the FIMA 2 of 2021 as newer legislation replacing some of the old statutes can only be appreciated. With the draft regulation, (draft regulation RF.R.5.10.), the custodianship that government is taking to ensure the sustained wellbeing of its citizens can be seen. I would also like to acknowledge the unfortunate situation under which children of a deceased may find themselves if their guardians do not have good savings in whatever form.
While appreciating the efforts in the draft regulations, there are concerns which may resonate with many people. Firstly, there is a perceived feeling that the economic situation of the country may not remain the same for many years to come, which could result in citizens losing their pension savings totally. Perceived or material, this concern remains real, judging from what has happened elsewhere, especially in the African context. Secondly, all citizens do not have the same amounts of savings in pension funds. Whereas the 25% proposed to be offered during the pre-retirement period may be a good reserve to cover some individuals during their unemployment period, it can be too little to sustain the next person who might need it for survival. Thirdly, the draft regulation appears to intrude on individual autonomy, that is, the right to self-regulation and making individual decisions for oneself. Current regulations have entrusted 21-year-old, non-financially experienced individuals to have access to 100% of their deceased guardian’s pension savings. This is supposed be a concern.
The concern of potential instability or possible disruption to the pension fund is not helped by the volatility that is currently related to the Russia-Ukraine conflict and the Covid-19 pandemic. My proposal is that the benefit, the satisfaction, the risks and the right to 100% pension funds be afforded to the citizens at any time it becomes necessary. My wish is to perhaps discuss modalities of this payout, such as 100% paid over a course of two years at various intervals. If there are concerns that the wellbeing of children of a deceased guardian need to be taken care of, as in the majority of cases death may occur during the period of employment, it is this category that needs to be discussed first as many of them will be financially inexperienced and/or had just turned 21 when the 100% of their benefit is given to them. There is need to ensure that pension fund savings remain with children or youth for a period of time, hopefully through their higher education period. This can be done by providing access to the pension savings in percentages as they age. Furthermore, the consultation approach happening at the moment should where necessary be representative for the situation to warrant change based on evidence. I further would suggest a reversal of the proposed regulation to a situation where 20% or less of the pension fund savings are preserved to be available at retirement age. While I evaluate my concern against fear of change, I still believe that the proposed regulation asserts that there are limitations on individuals in making sound financial decisions. If sound financial decisions by individuals are a concern, evidence should be brought in to reflect a failure in our current extensive educational programmes to addressing this concern, which in my opinion is insufficient and needs to be intensified to address all levels of the human cycle, from youth to adulthood.