Africa-Press – Eswatini. With Miccah Nkabinde , ENPF Conversion Specialist
As we enter the second edition of our Likhweti column, I want to begin by expressing my sincere appreciation for the overwhelming feedback that followed last week’s inaugural publication. Your thoughtful questions, challenges, encouragement, and reflections have shown just how important this national conversation on retirement security truly is.
Some of you shared personal stories; some hopeful, others deeply concerning; about navigating life after retirement under the current Provident Fund model. I have taken all these contributions to heart. As promised, a detailed selection of your feedback and my responses will be published in next week’s issue, which will also be the final column of the month.
This week, I turn the spotlight to a topic that sits at the core of our national debate; the challenge with the lump-sum payout system and why Eswatini must transition to a sustainable monthly income model. As the ENPF Conversion Specialist, I have witnessed the realities of how the current Provident Fund structure impacts retirees, and why the ENPF Bill 2025 proposes a decisive and necessary shift.
From Lump Sum to Lifelong Income: The Provident Fund Challenge
The ENPF currently operates as a Provident Fund, which is a type of Defined Contribution (DC) scheme. This model is characterised by two key features:
Defined Contribution
Contributions made by both employer and employee are fixed. However, the eventual retirement benefit is not guaranteed. It depends entirely on the total contributions accumulated over the years—plus investment returns earned on those savings.
Lump-Sum Payout
At retirement, a member receives everything they have saved, including contributions and interest, as a single lump sum.
While this may appear attractive, it creates severe long-term risks.
The Risks of the Lump-Sum Payout
1. Quick Depletion (Running Out of Money)
A sudden large payout often leads to unplanned spending. Without the discipline of a regular monthly income, many retirees exhaust their lifetime savings within 3 to 5 months.
2. Poor Investment Choices
Most retirees are not investment experts. In desperation, many invest in high-risk ventures promising unrealistic returns, or fall victim to scams—resulting in the total loss of their savings.
3. Increased Vulnerability in Old Age
When the money runs out, retirees are left with no income, becoming dependent on family, government support, or charity.
This is the single biggest driver of old-age poverty in our country.
The overall effect is a rapid decline in quality of life, dignity, and stability.
The Case for Conversion: Moving to a Pension Fund
The ENPF Bill 2025 proposes transforming the ENPF into a modern Pension Fund, shifting from lump-sums to guaranteed monthly income for life.
Pension Fund Model (Monthly Annuity)
Instead of receiving a lump sum, the retiree uses their accumulated savings to purchase an annuity that pays a fixed, predictable monthly income.
Lifelong Security
This ensures the retiree never outlives their income. It addresses the primary vulnerability in the current system.
Controlled Spending
Regular monthly payments enforce discipline, protecting savings and ensuring retirees can meet essential needs throughout their lives.
Conclusion
The lump-sum model—while familiar—is outdated and exposes retirees to financial distress and poverty. Transitioning to a monthly-income pension system is not only modern, but compassionate, sustainable, and protective of retirees’ dignity. The ENPF conversion is ultimately about ensuring that every worker in Eswatini enjoys stable, predictable income long after their working years have ended.
Source: Eswatini Positive News – News Website
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