A report compiled by the World Bank in collaboration with the Botswana Institute for Development Policy Analysis (BIDPA) paints a worrying picture of a country with a ballooning population of elderly people who retire without pension.
By 2012, the number of people aged 60 years and over in Botswana was estimated to be 135, 187 of whom 40, 500 (about 30 percent) are estimated to be poor. This, according to the World Bank and BIDPA, is as a result of lack of pension for most retirees.
“We have no information on the number of retirees of the Government of Botswana’s defined benefit pension scheme, but they may number about 2000. This would imply that out of all people aged 60 years and over, only eight percent have pension,” the report stated.
Researchers at the World Bank and BIDPA further assert that many of the 40, 500 poor elderly must be among the 124, 000 Batswana who are 60 years and over and who do not have pension but are certainly facing major financial difficulties in their old age.
The World Bank and BIDPA experts outline the HIV epidemic amongst the major challenges that local retirees face. “The HIV epidemic has placed significant stress on the elderly as they can no longer count on the financial support of their own children,” the report reads in part.
Financial Planner and Managing Director of Premier Wealth, Martin Hoko described the scenario as ‘risky’ as such retirees are always a burden to the state.
He said most people who retire without pension always suffer after retiring and having no source of regular income, “as they were used to money”.
“Such people would have no money to contribute to the economy despite the fact that they have been part of the buying power. Even those who end up enrolling for the old age pension have a waiting gap before they can reach the entitlement age of 65,” he said.
He added that the trend is worrisome as the outcome of having no other source of income usually leaves the retirees with no positive contribution to the domestic economy.
“That is why it is essential to make employees pension a ‘mandatory’ across the board in both government and private employment,” Hoko said.
In 2001, the government decided to change the public officers’ pension plan from a defined benefit pension scheme to a defined contribution pension scheme, the Botswana Public Officers Pension Fund (BPOPF).
The BPOPF members contribute five percent and public employers 15 percent of the members’ salary to individual savings account. At the same time a member can voluntarily contribute up to 10 percent of their salary to a pension account.