… Legal expert review says PSPF not a voluntary or mere savings scheme but part of conditions of service.
The Eswatini National Pensions Fund (ENPF) proposed inclusion of civil servants may harm civil servants, according to a legal expert’s review report on the proposed conversion of Eswatini National Provident Fund (PSPF).
This legal expert review, undertaken by the PSPF to look into the legal implication of the proposed involvement of civil servants in the new Fund has found that this move will harm the members contrary to multiple reports published suggesting civil servants will be better off. The Fund has maintained that it is not against the formation of the national pension fund, instead supports it but without the civil servants as they already have the PSPF. It also shares concern of proposal to reduce the contributions by members to PSPF as financial projections by experts have shown that it would harm the Fund.
The legal review has been done to ensure regulatory compliance, manage risk, and protect the Fund’s interests in light of this discussion on the conversion.
The review, now shared with the media, notes that it is important to emphasize that the Public Service Pensions Fund is not merely a savings scheme. It is a condition of service. From the moment a public servant enters government employment, they are entitled to pension benefits under terms set out in the Pensions Order, 1993. These benefits are not discretionary; they form part of the contractual and statutory promise made by the government to its employees.
“If the Eswatini National Pension Fund (ENPF) Bill is enacted, it must be clearly understood that this development cannot and should not override the existing obligation of government to contribute to the PSPF on behalf of its employees. The scale and structure of contributions set out in the PSPF Order must remain intact. Any attempt to reduce or divert those contributions would not only violate the legal framework but also risk breaching the implied terms of employment and undermining public confidence in the State,” it notes.
Two Main Risks Facing Civil Servants Identified
The legal expert review has identified two risks of the involvement of civil servants in the new pensions fund.
Where public servants are absorbed into the ENPF without due consideration of existing PSPF entitlements, two risks arise:
a. Fragmentation of benefits- future benefits may become uncertain or diminished if the ENPF is not aligned to the PSPF’s structure.
b. Inequity among employees- if only new entrants are required to contribute to the ENPF while existing members remain with the PSPF, it will create two classes of public servants, potentially leading to grievances and morale issues.
The legal review notes that new public servants sustain the long-term viability of any pension fund. Without fresh contributions from new members, the PSPF’s cash flow base erodes over time as older members retire. Redirecting new entrants away from PSPF to ENPF will not only fracture the system but may threaten its financial sustainability.
“In this sense, new members are the lifeblood of the Fund. If they are excluded from PSPF, it will eventually become a closed and diminishing scheme, with fewer active contributors supporting a growing number of pensioners,” it states.
Any long-term pension strategy must protect intergenerational continuity and fairness. A dual-contribution arrangement must be clearly acknowledged, carefully designed and fully funded, not assumed away or left to chance.
ENPF must not weaken accrued PSPF members rights, benefits
The Chief Executive Officer of PSPF Masotja Vilakati says the review is one of many they undertake to get indepth knowledge on the issue and to safeguard their members. This also includes actuarial reviews.
“The PSPF Order remains binding and must be honoured in full. The establishment of the ENPF must not come at the cost of undermining PSPF, weakening accrued rights, or compromising the dignity and retirement security of Eswatini’s public servants. The solution is not to absorb new members into ENPF at the expense of PSPF, but rather to ensure concurrent or coordinated contributions where necessary and to honour the full value of the pension promise,” he says.
It is proposed that instead fovernment should also commit to contributing to the ENPF where applicable, but not at the cost of diminishing the pensions and retirement security of civil servants. The PSPF position and those of members who have weighed in the debate over the past weeks is that contribution obligations under the PSPF Order must remain untouched, both in structure and value.
Reports suggesting that the PSPF is an occupational scheme, are inaccurate as the Fund is not an occupational scheme in the conventional or legal sense. Occupational schemes are usually voluntary, established by the employer and governed by contractual rules. The Fund, by contrast was established by legislation, not employer discretion and is mandatory for qualifying civil servants. The Fund has its benefit structure fixed in statute and is funded through statutory contributions from both government and employees. As such, legal reviews state that it is not correct and it is legally inaccurate to categorize the Fund as an occupational pension fund subject to ENPF registration and regulation.
UNDERSTANDING THE STATUTORY FUND
The Fund is a statutory pension fund established under the King’s Order-in-Council No. 13 of 1993.
- It is a legal entity with its own identity, enjoying perpetual succession and a common seal, and may sue or be sued in its corporate name.
- It is governed by its own legislative framework.
- It provides defined retirement benefits to public servants.
- It operates under mandatory membership and contribution obligations set out by law.
As a creature of statute, the Order holds the force and effect of primary legislation and is superior to ordinary statutes unless expressly repealed.
CIVIL SERVANTS FULLY CATERED FOR BY PSPF- BOARD OF TRUSTEES
The Public Service Pensions Fund (PSPF) Board of Trustees says the civil servants are already catered for by PSPF and need not be included in the proposed conversion of the Eswatini National Provident Fund (ENPF) into a national pension scheme.
In a statement shared with the media this week, the PSPF Board of Trustees Chairman Sammy Dlamini said the Board said part of their mandate is serving the interests of the Fund’s members. He said from a social security stakeholder’s view, the conversion is a good move and is welcome as it will help non-PSPF members and private sector employees to be able to now have a pension. The Chairman said however they are concerned with plans to also involve civil servants in the new Fund and to also reduce current contributions to PSPF. He said their view is that the conversion must go ahead without civil servants as they are already catered for by PSPF. Dlamini cited the need to safeguard members’ contributions and ensure the Fund’s long-term financial stability at all times.
He said they carefully reviewed the conversion proposals and assessed their potential impact on civil servants’ retirement savings.
“The Board supports the Fund’s position on the matter to have civil servants excluded in the ENPF conversion and to ensure that civil servants’ money is safeguarded as their mandate,” Dlamini said. According to the Chairman, the Board’s view was guided by its statutory responsibility to oversee the Fund’s operations, protect members’ interests, and ensure that PSPF remains financially sound.
Dlamini explained that financially, diverting contributions could reduce inflows to PSPF while obligations to current retirees remain, potentially destabilising the Fund.
“The welfare of civil servants past, present, and future must not be compromised in this process,” Dlamini said. “Our fiduciary duty is to protect members’ benefits and ensure that PSPF continues to deliver secure, predictable retirement income.”
The Board also cited lessons from other African countries where pension reforms were successfully implemented with careful planning, legal frameworks, and financial guarantees. Other countries expanded coverage without negatively affecting existing contributors, underscoring the importance of a phased and well-managed approach.
Discussion about this post