BILLIONS of Kwachas in pensions have been stolen, leaving thousands of pensioners destitute because of a pension scam imbedded through an amendment in the laws of Zambia.

A pension expert has now warned that unless government reverses the amendment on how pension schemes must run, thousands of retirees will die without receiving their benefits.

Originally, the pension schemes were registered with the Zambia Revenue Authority (ZRA) commissioner in charge of taxes to ensure sustainability through favourable terms, including exemptions from Value Added Tax (VAT).

After an amendment in 1997, the process was aborted. Instead of registering with ZRA, the schemes were registered as funds held by trustees and were registered as Trusts at the Ministry of Lands which effectively vested the properties into the trustees to the exclusion of pensioners.

In addition, “VAT” which was apparently recovered was retained by fund managers who illegally paid themselves as fees.

Making submissions to the Parliamentary Committee on Health, Community Development, and Social Services on the welfare of older persons in Zambia (pensions), a pension expert, Albert Kashiwa, revealed that the 1997 amendment of the law effectively deprived pensioners their benefits.

He could not understand why the Pensions and Insurance Authority (PIA) had allowed such a situation to exist.

“One of the reasons why we are living in abject poverty is that the assets on which we spent our lifetime funding, when we were still in employment, are no longer ours because they have been taken away from us. We have no ownership whatsoever,” Mr. Kashiwa complained.

He said retirees did not know how the amendment was processed but that the end result was the creation of pension funds, distinct from the original pension schemes which belonged to pensioners.

“Going back to 1966, parliament had clearly defined the meaning of insurance business as the business of assuming the role of insurance. In 1997, that definition was changed and now says insurance is the business of issuing insurance policies.

“However, this is not a business but merely a task which is there to evidence the existence of a policy of insurance. As a result, there is a problem in both insurance and pension business and is affecting retirees,” he said.

He said as a result of the 1997 amendments, it had become difficult for retirees to take account of their assets as ownership was transferred to the fund managers. “Instead of taking our pension scheme to the ZRA commissioner general in charge of taxes as required by law, they have taken our pension scheme to the Ministry of Lands. Approval of pension schemes has now been taken to the Ministry of lands and as a result, instead of registering a pension scheme, they are registering trustees or a Trust,” he said.

He proposed that parliament must urgently restore the benefits due to pensioners by coming up with laws devoid of ambiguity.

“Parliament is where everything must start from because each time we ask about what is going on, they are referring us to defective Acts of Parliament and when I look at the current Act of parliament, I even wonder who presented bills to parliament before enactment,” he said.

DailyNation