Assembly votes to approve increase in retirement age |09 December 2022
The National Assembly on Wednesday voted to approve amendments to the Seychelles Pension Fund Act to increase the age for Seychelles Pension Fund and Social Security pensions from 63 to 65 years as from January 1, 2023.
Only LDS majority MNAs present voted to approve the amendments, 16 of them, while five minority members voted against and one abstained.
Vice-President Ahmed Afif was in the National Assembly to present the Seychelles Pension Fund (Amendment) Bill, 2022 and he was flanked by the secretary of state for finance Patrick Payet, the chief executive of SPF Nisreen Abdul Majid and other key official of the SPF and the Attorney General’s office to answer MNAs questions and clarify issues raised.
VP Afif noted that as previously announced by the Minister for Finance, National Planning and Trade, Naadir Hassan, during the 2022 budget address, the retirement age for Seychelles Pension Fund (SPF) contributors will increase from 63 to 65 years as from January 1, 2023.
VP Afif reminded Assembly members that the increase in the age for pension is a recommendation of the SPF’s actuary following an exercise it conducted in 2018 and approved by the then United Seychelles government for implementation in 2023 in order to boost sustainability of the SPF.
Other recommendations of the actuary included a revision in the rate of contributions by both employees and employers, revision in indexation for retirement pension. The actuary further highlighted that if these recommendations were not implemented on time, the SPF’s fund reserve will dry up completely by the year 2034.
“It is therefore important to note that the main factor pushing for implementation of the recommendations include the fact that people are living longer with an average life expectancy of 77 years in 2020 according to the National Bureau of Statistics. Additionally the elderly dependency ratio that measures the contributory support of pensioners is also decreasing,” VP Afif explained.
He further added that similarly the birth rate is also reducing considerably and if no action is taken right now, the impact on the number of contributors to the SPF’s fund will be severe.
VP Afif went on to note that the demographic changes and the adverse financial impacts on the SPF have started to be strongly felt since the start of 2021 when a financial deficit between pension contributions and payments based as per the audited accounts of the SPF was R15 million in 2021 and the effect has continued to be felt until the 3rd quarter of this year even though there is a slight increase in the rate of contributions.
“We expect that when all the recommendations of the SPF’s actuary are applied, the long term sustainability of the SPF will improve,” VP Afif stressed.
He noted that other provisions of the proposed amendment are to bring the definition of retirement in line with the definition in the Social Security law and correct an anomaly in Section 68 of the Seychelles Pension Fund Act to ensure that the principal act of pension is in line with Pension Fund Benefits Regulations.
VP Afif further noted that the Bill also provides for the minister to have the power to make regulations, to prescribe conditions and mechanisms for earlier retirement.
He went on to point out that retirement age under Social Security will also be increased from 63 years to 65 years as from January 1, 2023.
VP Afif has reminded MNAs and the general public that the proposed amendment is critical because the government does not want the SPF to fall into financial difficulties.
“We want to reassure all pensioners that they will all enjoy their benefits under a sustainable system not for a few years or up to 2034 but for today, for our children in the future. We need a pension fund that will continue to exist for all future Seychellois generations and for any government that comes to power to see a functioning fund,” VP Afif stressed.
MNAs were divided on the proposed amendments. The opposition members argued that the SPF and the government should explore all other possible options other than increase the retirement age and also to ensure that all individuals, businesses and companies which should be contributing to the fund are honouring their responsibilities and to put in place strict mechanisms to allow for people working in the informal sector to also make their fair contributions and for those unemployed to take up formal employment.
But the majority members argued that the decision has been long overdue and there is no way that the decision should be postponed again.
In his right of reply VP Afif remarked that the debate has brought forth a lot of emotions but he is satisfied that the government has explained the rationale behind the amendments which have been proposed several years before the present government came into power.
He noted that the minority party members’ argument that the public need more information and that the SPF has to do more public consultation does not stand because a lot of public consultation has been held and the public knows very well what is being proposed and the changes to take place.
“Even though it is a painful and very unpopular decision we have to do it because we are a responsible government and we are doing what is right for our people, our future generations and our country,” VP Afif stressed.
Meanwhile the National Assembly will in its sitting for today consider the Business Tax (Amendment) Bill, 2022 and the Procurement (Amendment) Bill, 2022.