THE National Pension Scheme Authority (NAPSA) is owed about K2.6 billion in outstanding contribution arrears and penalties by Government, grant-aided institutions, parastatals and councils as at December 31, 2014.
Of the total K2.6 billion, which has been accumulated over a period of time, K239.4 million are in arrears from contribution principle while K2.4 billion is from penalties.
NAPSA director general Charles Mpundu told a parliamentary committee on Economic Affairs, Energy and Labour recently that the non-payment of contributions has a negative bearing on the financial sustainability of the scheme in the long-term.
He said central government has no arrears in principle but, owes K73 million in penalties while Government aided institutions have a debt of about K47 million in principle and over K498 million in penalties.
Mr Mpundu said the lag in repayment by Government was due to a change in payment system which was taken up by respective ministries.
“What led to the accumulation of the debt and arrears for Government is that between 2000 and 2007, the payroll system at the Ministry of Finance was administered in such a way that five percent of employees’ share was to be paid and remitted to the authority by the respective employing ministries.
“While the respective ministries remitted the five percent employees’ share of the contributions, the Ministry of Finance defaulted on the remittance of the employers’ share,” he said.