WORKERS’ COMPENSATION CORNER with MAYBIN NKHOLOMBA
THE International Labour Organisation (ILO) consultants Marielle Phe Goursat, Cristina Lloret and Hisoshi Yamabana were in the country to consult, among other key stakeholders, the Workersâ€™ Compensation Fund Control Board (WCFCB) officials on the proposed social security reforms.
The visit by the consultants marked an important step in the reform process, which we have previously discussed on this platform. Certainly, there is no doubt whatsoever, that the reform process of the WCFCB, and might we add the social security sector in our country, is long overdue.
Readers may agree that several stakeholders have expressed concern at the levels of benefits; service and compliance in the social security sector. And it is just time that positive responses are given by those entrusted to manage these public institutions.
As we have discussed before, several measures have been taken to address stakeholder concerns, especially on levels of benefits accruing to beneficiaries under WCFCB. The measures include indexation of monthly pensions to the consumer price of Zambia, introduction of a minimum pension and increasing of the threshold for payment of monthly pension payments.
Notwithstanding the measures taken thus far, giant or as they say, million dollar questions still beg. Is the WCFCB social insurance system also entangled in the trap of commercial insurance systems? Does it move at a frighteningly fast speed to collect premiums, and unlike wise, at a chameleonâ€™s speed to settle claims? Are the levels of compliance among employers at their optimum?
These are but some of the critical questions that may come to mind, but it is important to follow the entire reform process, if we have to come to logical inferences on the necessity of the consultations held with ILO.
The genesis of the reform process can in fact be traced to social security reforms implemented over the past 20 years, whose outcomes, specifically for the case of WCFCB, included the merger of the Pneumoconiosis Compensation Board (PCB) with WCFCB to create the current WCFCB enacted through the Workersâ€™ Compensation Act number 10 of 1999.
However, the partial reforms of 1990s did not adequately address the underlying challenges of the social security system in Zambia. The system was faced with a number of challenges which resulted in beneficiaries being pushed into destitution due to the low levels of pension and delayed or non-payment of pension benefits caused by the poor financial position of the schemes, poor pension designs, outdated legal framework, lack of portability of benefits, non-indexation of benefits, and a weak investment environment, among others.
To comprehensively address these challenges, broad-based social protection reform process aimed at creating a moderniSed social security system that would adequately address the plight of workers, retirees, and beneficiaries are being considered in our country. Soon we will have in place, measures that would address the long-term financial sustainability of the social security system.
In light of the foregoing, a technical committee to spearhead the reform process has been constituted, and it requested the ILO, World Bank and IMF to carry out independent actuarial assessments to inform and enhance the work of the committee. This is the reason why the ILO consultants visited our institution to understand our operations and to:
(a) Make actuarial projections of the pension scheme based on the proposed reformâ€™s parameters and demographic projections and provide the standard set of actuarial descriptors based on ILO guidelines for actuarial analysis.
(b) Conduct an analysis of benefit experience (For example, social insurance coverage ratio, and average benefit replacement ratio).
(c) Provide the technical team and policy makers a set of recommendations indicating measures commended to preserve or establish the financial equilibrium of the proposed scheme in the future.
(d) Make proposals on the key design features of the occupational injury scheme including pension calculation formulae, benefits, and contribution type and rates.
(e) Provide opportunity for building capacity of the government technical officers on ILO actuarial standards, modelling and mathematical models.
We believe that the outcome of the consultations will have a positive bearing on the reform process, and serve the interests of those stakeholders whose livelihoods depend, partially or entirely on the social security system.
For us, this is a very exciting time, in the history of the WCFCB, as it presents a great opportunity to make amends to those aspects of the system that have not served society well.
In our concluding texts, we remember those who have made our business successful, and say a big thank you. We remember those who are unable to join us to celebrate Christmas because of occupational injuries and diseases; and those who have made significant contributions to the well-being of our brothers and sisters who depend on the WCFCB system.
And of course we remember those who have followed our column. To you all, we wish you a Merry Christmas and Happy New Year.
The author is head of communications and customer services at the Workersâ€™ Compensation Fund Control Board.
WORKERS’ COMPENSATION CORNER with MAYBIN NKHOLOMBA