….as employees question post-retirement medical aid reforms
The Roads Authority is accused of devising a post-retirement medical aid pay-out plan that will benefit management members handsomely at the expense of the rest of the employees.
And although workers hold contrary views, the company vehemently denies that those occupying top positions stand to benefit more than their junior counterparts.
This comes amid concerns surrounding the financial situation of the company and the country at large.
The Patriot has learnt that RA plans to pay-out the money in three equal instalments over a period of three years. Meaning, if a worker is supposed to receive N$90 000, that individual will be given N$30 000 for each of the three years. Questions have now surfaced as to why the company is pushing to implement the pay-out plan if it cannot afford once-off payments and instead resorting to instalments.
The workers also allege that they have not been consulted while others questioned the formula used to calculate how much money a worker must get.
“Management must be honest and tell us what they want to achieve with this because in some instances, employees who worked the same number of years and in similar positions are receiving different amounts. How is this calculated?” questioned a source who preferred to remain anonymous.
The company however maintains that the post-retirement scheme is purely aimed at preventing the financial risks that RA faces due to a growing “unfunded liability” and that the pay-out is by no means a golden handshake. The post-retirement medical aid pay-out, according to RA, is to eliminate the financial liability/ risk because auditors have also apparently flagged this as a risk area due to it being a completely unfunded liability.
Responding to the workers’ concern, RA’s chief executive officer (CEO) Conrad Lutombi refuted claims that the consultation process was flawed prior to reaching a consensus because “a road show was done by RA Management and Consultants to all eligible employees across Namibia, where the RA Management and Consultants explained the process and the reasons behind it to all eligible employees”.
“Furthermore, employees were given an opportunity in the meetings to ask questions and to raise their concerns with the RA Management and Consultants.
Further consultations will be done and we will ensure that all staff members are adequately informed before the process is finalised,” said Lutombi.
Lutombi further stated that the post-retirement medical aid scheme dates back to 2000 when RA came into existence and it is not a plan to enrich retiring employees as alleged by certain sectors.
“At its inception in 2000, the RA made provision to subsidise employees’ medical aid contributions when they retire.
However, this benefit became a growing liability for the organisation and a decision was taken to terminate this benefit, in consultation all relevant stakeholders, in December 2011.
This is a very large liability which the organisation can no longer afford and thus we have taken important steps to mitigate this liability,” explained Lutombi.
The RA boss further explained that: “In a nutshell, the post-retirement medical aid buy-out is the release of funds (subsidy) to staff members who were in the employment of the RA up to December 2011.
The process entails the release of funds to all eligible employees to relinquish their right to the subsidy of their medical aid contributions during retirement.”
However, RA’s staff members are also given an option to continue with this benefit, if they so wish added Lutombi.
Lutombi further indicated that the funds gained from the post-retirement medical aid buy-out ought to be reinvested as it is meant to be used only after retirement.
As part of the proposed post-retirement medical aid, eligible RA employees have one of three choices, these includes: a lump sum, which is transferred the employee’s Roads Authority retirement fund; a lump sum which is transferred to an approved retirement annuity of the employee’s choice or a cash lump sum which will subject to statutory tax deductions.
Lutombi said eligible employees who are closer to retirement, (mostly the senior employees) are expected to pocket more.
“The differences or gap will be that those who are closer to retirement (irrespective of their position in the organisation) will get a higher amount compared to those who have a lot of years before retirement. This is due to the fact that they are closer to retirement,” Lutombi said.
The post-retirement medical aid scheme was formulated by South African based actuary, ZAQ Consultants and Actuaries Namibia.
Asked why a foreign firm was chosen to formulate the scheme, Lutombi said: “The Consultant is a fully registered Namibian organisation.
However, a South African actuary with experience in such cases was used to facilitate the process.
The bi-annual process for the initial consultancy to do the calculations was determined based on a closed quotation basis.”