Zimbabwe has a substantial informal economy, making it difficult to collect contributions or taxes to pay for public pension systems, analysts have said.
Analysts say this challenge negatively impacts individuals working informally, ranging from youth to the elderly.
This is made worse by the fact that most programmes, like National Social Security Authority (NSSA) NSSA and other private ones, only serve individuals who are formally employed.
Social security pensions are crucial measures for assuring both men and women’s income stability as they age.
For older people to maintain their dignity, welfare and to fully exercise their legal rights, pension is important particularly when combined with access to high-quality healthcare services.
However, analysts claim that in Zimbabwe, the danger is a majority who are working informally and those old enough to receive a pension do not.
For those who do receive a pension, the income provided is often inadequate to keep them from living in or falling into poverty.
“Because of this, the majority of older people, both men and women, must work as long as they physically can, typically in poorly paid or low compensated jobs,” said Iphithule Maphosa, an analyst.
Maphosa said even for those who were formally employed, coverage of pension benefits is still a problem because elderly people receive meager pensions that leave them struggling to make ends meet.
“You find many people are receiving low pensions which do not allow them to thrive but are just for survival,” he said, noting that this would apply for young people who were not in formal jobs.
“How many young people today are saving something for tomorrow? People nowadays are living from hand to mouth and rarely save.”
Zimbabwe’s Mortality Tables, released in collaboration with the Zimbabwe National Statistics Agency (ZIMSTAT), show that the country’s mortality rate has been declining in recent years, with the overall mortality rate falling from 8.5 deaths per 1000 population in 2015 to 7.4 deaths per 1000 population in 2020.
The Insurance and Pension Commission (IPEC) commissioned the Zimbabwe Mortality Tables Project in 2020, to develop Zimbabwe-specific Tables that are relevant to the local context.
This was after realising that Zimbabwe’s insurance and pensions industry has been using foreign Tables, which may not be appropriate for the local market.
One of the most important discoveries is that NCDs such as diabetes, cardiovascular disease, and cancer are the main causes of death in Zimbabwe.
Maphosa noted that while many older persons are in excellent health or economically active, others live with ailments or in poverty and tend to work longer and rely more on family assistance.
“This is different from the situation in more developed countries where public systems, including pensions and health care, provide for the vulnerable or older persons like in South Africa where grants are provided monthly,” he said, urging the government to prioritise and balance budgets to reduce inequality.
Another analyst, Bernard Magugu, agreed that because of the unstable Zimbabwean economy, few people were able to save money in a significant way as opposed to stable economies where the financial industry is strong.
“In general, saving behavior follows this pattern where people tend to borrow during their first few years of employment, save during their prime working years, and then spend some of their savings after they are no longer employed and are retired,” Magugu said.
Magugu added that the Zimbabwean situation was depressing because young people were likely to grow older and poorer.
“No one can beat the ongoing aging process and in a country like Zimbabwe, people at an advanced stage of aging are less likely to enjoy their savings, that’s if they have them,” he said.
Cultural Studies Scholar, Dr Khanyile Mlotshwa, said rethinking social protection systems, including pension schemes, is necessary.
He explained that maintaining the financial viability of public pension systems while assuring economic security for all older people, especially those who work in informal employment, is a significant problem.
“In order to have sustainable and inclusive economic growth in a society that is getting older, it is also essential to increase the number of decent jobs available. This is in addition to acknowledging the substantial contribution made by the largely unregulated care sector to the formal economy,” Dr Mlotshwa said.
Dr Mlotshwa said the introduction of noncontributory schemes can help to close the gaps.
“Public policies play an important role in supporting efforts to provide adequate income in retirement while ensuring the sustainability of pension systems. These policies can be grouped into pension system, financial, and labour market policies,” he said as a measure to make sure everyone has at least a basic level of financial security in their old years.
“Governments and private players must increase the coverage of contributory pension plans and establish non-contributory pensions. The pressure to reduce state responsibility for ensuring income security in old age and shift a large portion of the economic risks associated with pension provision onto individuals is being generated by fiscal consolidation processes, which is undermining the sufficiency of pension systems and reducing their capacity to prevent old age poverty.”