By Sifiso Sibandze
With the announced 6.0 per cent increment of the statutory contribution, the Eswatini National Provident Fund (ENPF) will get an E159.6 million cash injection for the year 2023.
The ENPF, which is valued at E7 billion increased the statutory contribution from E330 to E350 per month (175:175) with effect from January 1, 2023. ENPF CEO Prince Lonkhokhela advised employees to check their pay slips to see if the correct deductions have been effected.
The Provident Fund has over 38 000 active members. Each member will contribute E4 200 per year and the over 38 000 members will contribute E13.3 million per month and E159.6 in 12 months.
The contributions received from members are used to pay benefits. The Provident Fund pays benefits related to age and early retirement. The age benefit is paid when the member has reached 50 years of age, whereas the early retirement benefit is paid to members who are aged between 45 and 49 years of age and have retired from regular employment.
The statutory contributions are payable by contributing employers in respect of E3 500 or less wages during each calendar month.
Currently, Provident Fund is undergoing a conversion process to a national pension fund. However, the conversion process has provided a glimpse of power struggles between those within the government and those in the Public Service Pension Fund (PSPF).
This has further caused a delay in the finalisation of the process as neither side wants to ‘lose’. In addition to these factions, the Eswatini Financial Times has reliably established that the public servants themselves are also opposed to the conversion of ENPF which is viewed as a serious threat to the existence and viability of the E30 billion PSPF going into the future.
Sources close to the matter have said that the opposition is not necessarily against the conversion of ENPF to a pension fund, but they are strongly against that civil servants should be compelled to contribute to the envisaged national pension fund.
Ideally, the ENPF Bill No. 9 of 2018 seeks to form one pension fund that will cover every working liSwati in the country both from the private and public sectors. According to commentators, the successful conversion of ENPF could downgrade PSPF to assume the status of being an enterprise-based pension scheme (an in-house pension scheme) that was established through a contract of employment.
What this will result in, is that government employees would contribute to two pension funds, PSPF and the yet-to-be-converted National Pension Fund, if the ENPF could be successfully converted with the provision that civil servants should be part of it. Practically, the contributions made by both the government and employees to PSPF could be reduced drastically but increase contributions to the ENPF on the other hand.
According to the PSPF’s 2022 Annual Financial Report, the fund has 40 594 active members and 26 363 pensioners. This suggests that the national pension fund (ENPF) could have a monthly cash injection of about E14.5 million, which translates to E170.8 million per year if the government workers could join the new pension scheme.