Eswatini National Provident Fund (ENPF) Chief Executive Officer (CEO) Futhi Tembe has reassured members that supplementary contributions, which are made in addition to the compulsory statutory contributions, will retain their distinct status in the new proposed system.
Supplementary contributions are voluntary top-up payments made by employees, employers, or both, which are not only voluntary but also flexible, allowing members to tailor their savings strategy to suit their financial goals.
“Supplementary contributions remain a cornerstone of our evolving pension framework as we navigate the conversion process. They give our members the power to shape their own retirement journey,” Tembe said, emphasising the critical role that supplementary contributions play in ensuring financial security in retirement.
She explained that while the statutory contributions will form the basis for calculating pension payouts under the new scheme, supplementary contributions will remain separate to provide an additional benefit, a financial cushion that could make the difference between merely surviving and truly enjoying one’s retirement years.
Tembe said the Conversion Bill, which now awaits parliamentary approval, recognises the continuing importance of these contributions.
The rules governing these contributions, including how they are managed and paid out, will, according to Tembe, be prescribed by the minister responsible, upon the recommendation of the ENPF Board and in consultation with an actuary. “This ensures that supplementary contributions remain an integral part of the retirement system, even as the Fund undergoes structural changes,” she stated.
The CEO also highlighted a number of advantages linked to supplementary contributions and chief among these, she said, was the ability to significantly increase one’s retirement benefit. “Every supplementary contribution increases the total benefit available at retirement,” said Tembe, arguing that this would result in a greater financial buffer in addition to the monthly pension or lump sum one receives from statutory contributions.
Another major advantage, she pointed out, is flexibility, calling attention to the fact that members can determine how much to contribute and when, depending on their income levels and retirement objectives. “This level of control is rarely possible under compulsory schemes,” she said.
Tembe further acknowledged concerns about how members can access supplementary contributions in cases of resignation, death or early retirement, pointing out that the specific access rules would be formalised in upcoming regulations. “In the case of a member’s death, the benefit arising from the supplementary contribution will be paid as a lump sum to rightful beneficiaries, either based on the member’s nomination or as prescribed by law,” she explained. Asked whether the conversion will affect investment returns or the tax treatment of supplementary contributions, Tembe responded that members have nothing to worry about on that front.
“Investment returns will not be negatively impacted and income tax will not be charged on benefits payable under the pension fund,” she said.
Tembe also clarified that the voluntary nature of supplementary contributions will remain unchanged post conversion, making it known that employers will not be required to make such contributions but may do so voluntarily.
“It remains a proactive choice by either the employer or the member to increase retirement security beyond the statutory minimum,” she stated.
