ZCTU position on extending retirement age


The Zambia Congress of Trade Unions is disappointed with the approach taken by government to review the current statutory retirement age from 55 years to 65 years. Consideration to review the current statutory retirement age follows the Presidential directive to which the Ministry of Justice has already drafted the pensions Amendment Bills.  After wider consultations with affiliate members and Zambian workers in general, the Congress noted that the principle of consultation with main stakeholders such as workers representatives was greatly undermined in this process because the unions and employers were only given the opportunity to make contributions after the process of reviewing the retirement age had advanced. In addition, the spirit of the review of the retirement age is closed and not accommodating contrary views.

In view of this, ZCTU does not consider the extension of the statutory retirement age from 55 years to 65 years as merited because there is no strong case so far advanced by Government to justify the revision of the statutory retirement age from 55 years to 65 years. In line with this, ZCTU has identified a number of factors that need to be taken into account before considering extension of the statutory retirement age to 65 years.

One of the factors to consider is the life expectancy. Life expectancy is not a mere statistic but should guide policy makers especially social security schemes to determine the appropriate retirement age which reflects realities on the ground. Official statistics from CSO (2009) estimates life expectancy at 52 years while the UNDP report for 2011 estimates life expectancy at 47.3 years. Generally, the statistics show that even the current retirement age of 55 years is higher than the life expectancy of a common Zambian.

What this implies is that even at the current statutory retirement age, a number of employees die before retirement, denying them the opportunity to enjoy their pension benefits. It is a known fact that the attrition rates are high even for public service workers where teachers alone accounted for 11,443 in 2009 (2009 Education Bulletin) partly due to high death rates. This brings to question any likelihood that a higher minimum retirement age would lead to people working longer, translating in greater economic output.

This could explain why the retirement age in developed countries is set below the average life expectancy and not above. Examples would includeSwedenwhere the statutory state pension age ranges between 61 and 70 years, with a life expectancy of 80 years and theUnited Kingdomwhere the state pension age is 65 years with life expectancy of 79 years.

In this regard, it is our view that increasing the retirement age is likely motivated by intentions to enhance solvency of pension systems because by implication there will be no retirement payments for the next ten years. What is overlooked, however, is the number of people that will possibly die before enjoying their benefits as a result of the extended period. It can be estimated that over 6 million workers would die without enjoying the benefits of their lifetime hard work.

We note that currently, no one is prevented to continue working even after attaining the statutory retirement age of 55 years. It is not illegal to employ someone who has reached retirement age, the reason why statistics from the 2008 Labour Force Survey indicate a high participation rate for people above the statutory retirement age with over 470,000 people above the age of 55 years still actively employed.

Further, we cannot ignore the challenge of Youth Unemployment when considering extending the retirement age. There is no shortage of skills among the younger generation required to replace the elderly so as to warrant an extension of the retirement age.  We have a number of qualified personnel already active and contributing to the development process. Besides, there is a large number of unemployed youth graduates still looking for employment; about 70 percent of youth with degrees are unemployed (LFS, 2008).  For the employed, a large proportion of the youths are in informal jobs where they have no social security coverage.

In this regard, Government’s focus should be to enhance social security packages and introduce financial management training to adequately empower retirees. Social security schemes should provide financial services such as business loans and mortgages to enable workers prepare for the time they would be out of employment. Increasing the statutory retirement age in the absence of a revamped social security system will simply mean more people will even die before they reach the statutory retirement age than is currently the case. Equally important, there is need to improve service delivery in terms of health, education and sanitation in order to raise life expectancy to justify the change in retirement age.

Currently, the majority of the workers are in the informal sector and are not covered by social security schemes. Thus, the statutory retirement age only applies to a few formal sector workers estimated to be about 500,000 from the working population of about 4,600,000. The majority of all workers, constituting about 90 percent of the total working population fall outside social security schemes. The worry of government in this regard should be to address the growing informality where an increasing number of people have no social safety nets rather than focus on a few formal sector workers already covered under social security schemes.

Alternatively there is need for a thorough assessment of the current pension system to consider best options of improving the schemes. There have been long standing debates about the current arrangement of our pension system. One of the issues to be addressed is harmonising the legislations. There is also need to harmonise the benefits structure and apply a common formula to standardise the benefits, and also ensure that no same category of employees contribute to different schemes; the case of teachers currently.

Alternatively, options should be given for early retirement. We note that only the PSPF Amendment Bill provides options for personnel in the Defence Forces, the Police Force, and Prison Service to retire on or after attaining the age of 45 years or after completing 20 years’ service. It is appropriate to extend such provisions to other workers covered under NAPSA and LASF. In this regard, ZCTU is proposing 55 years for early retirement or after completing 30 years’ service, with 60 years as mandatory retirement age.

In light of the above, we note that the government’s intention to increase the retirement age has not been done with adequate analysis of the current pension system to warrant an extension. No substantial justification has been advanced by government to extend the current statutory retirement age. In turn, this has generally been understood as a plan to create solvency in pension schemes because no retirees will be eligible for pension benefits in the next ten years. Consequently, Government will not have the problem of paying retirees for the next ten years.

In addition, not all of the people who could be due for pension benefits under the current system would be able to live up to 65 years and claim their benefits. On this basis, ZCTU does not support the review of the retirement age from 55 years to 65 years. Our suggested option is to consider 55 years or completion of 30 years in service as early retirement and 60 years as a mandatory retirement age. Although we know thatZambiahas one of the lowest statutory retirement age in the region, the decision to extend the statutory retirement age should be founded on justifiable empirical evidence. If the intention is to harmonise our statutory retirement age with that prevailing within the region, a comparative study within the region should inform such a decision. We cannot treat the retirement age like an import product. A systematic approach must be instituted to warrant such change.

The Author of this article is Mr. Roy Mwaba, the Secretary General for The Zambia Congress of trade Unions.

Any feedback please send to [email protected]           

Share this post