Zimbabwe’s Public Service Workers to Pay Pensions in Foreign Currency

The Treasury has mandated that public service workers earning in foreign currency must now make their pension contributions in the same currency, starting this year. This directive comes from the Public Service Commission (PSC). Employees who receive both foreign currency and local Zimbabwe Gold (ZiG) currency will contribute using the same ratio as their earnings.

In a letter dated May 28, 2024, Dr. Tsitsi Rosemary Choruma-Dozwa, Secretary of the PSC, stated that the USD National Social Security Authority (NSSA) contributions will commence after converting USD Covid-19 and cushioning allowances into pensionable emoluments, effective January 1, 2024.

This change aligns with Statutory Instrument (SI) 169 of 2021 for public sector employees, which takes effect on January 1, 2024. Section 8(b)(4) of the instrument specifies that those earning in a currency other than Zimbabwean Dollars must contribute to that foreign currency. For employees earning in both foreign and local currencies, contributions should mirror the same ratio.

“The outstanding contributions should be settled in three monthly installments, starting from 2024,” stated Dr. Choruma-Dozwa. She also communicated this directive to the government’s Paymaster.

This decision followed a letter dated January 24, 2024, from Dr. Charles Shava, Acting General Manager of NSSA, requesting assistance to inform the PSC about adjusting NSSA contributions in light of the conversion of USD Covid-19 Allowance into a pensionable salary, as outlined by Section 8(b) of SI 169 of 2021.

NSSA believes this adjustment is necessary to sustain the viability of their scheme.

Subsequently, Simon Masanga, Permanent Secretary in the Ministry of Public Service, Labour and Social Welfare, and George Guvamatanga, Permanent Secretary in the Ministry of Finance and Economic Development, wrote to the PSC Secretary, urging the implementation of this directive.

“The NSSA has advised that the computation of NSSA contributions is guided by Section 8(b) of SI 169 of 2021, following the conversion of the USD Covid-19 and USD cushioning allowances for Public Service employees into a pensionable salary,” the letter stated.

“In light of this, NSSA requests the commission to enforce the provision of SI 169 of 2021 from January 1, 2024, to ensure the sustainability of NSSA schemes.”