What happened in the National Assembly on Tuesday, 9th June, around the inadmissibility of the PNQ is nothing short of outrageous and makes a mockery of parliamentary democracy. This Assembly and this Speaker are Westminsterian in name only, much like all of our so-called ‘independent’ institutions are independent in name only. To watch an unelected Speaker hollering at, bullying and intimidating elected opposition members and representatives of some 63% of the electorate and giving egregiously biased and partisan rulings to shield the parliamentary majority which nominated him to this primordial Constitutional post from being held accountable flies squarely in the face of all the characteristics of a real democracy. If ever I’ve seen a veritable Potemkin Republic it’s this one we are currently living in.

I surmise that the PNQ was ruled arbitrarily and unilaterally as irreceivable is due to some sinister conspiracy at the highest level to refuse to shed light on the true intent and purpose of the radical pensions reforms very summarily announced in the Budget speech. Based on my understanding of the little information disclosed in the Budget Speech, if all the workings of the new system being introduced were to be revealed, there would be an uproarious outcry from many quarters.

So, let me share my personal understanding of what this government is imposing on an unsuspecting population.

The NPF, to which private sector workers currently contribute towards a top-up pension over and above BRP from age 60, is being closed. Current beneficiaries will continue to draw their contributory pensions, presumably funded by the income and assets of the closed fund. The question which arises is what will happen to residual assets, if any, after the last beneficiary will have deceased? I read that the fund has assets worth Rs 130 Bn. An indepth actuarial study of the closed fund is warranted to ascertain the actual state of its financial position as a closed fund.

The current BRP of Rs 9,000 will be permanently frozen at that level and will continue to become payable from age 60, a purely political decision manifestly.

From 01 July 2023, every citizen above the age of 65 will be paid an additional pension of Rs 4,500, it is claimed to fulfill an electoral promise of MSM. This is, of course, a blatant lie as to win the votes of the elderly, MSM explicitly promised to increase the pension every year in a staggered manner until the figure of Rs 13,500 is reached by the next elections in 4 years from now and it was implicit that it would be payable from age 60!

From 01 September 2020, a new tax is being introduced, the Contribution Sociale Généralisée, CSG. Note well the nomenclature. More on that in a moment.

Employees drawing less than Rs 50,000 monthly will pay 1.5% of earnings and their employers will be liable to what is effectively a payroll tax of 3%.

For employees earning more than Rs 50,000 monthly, the CSG tax is 3% and their employers’ payroll tax is 6%.

All of this means that this will be the end of the non-contributory universal BRP. Over time, the current BRP of Rs 9,000 will be- come worthless, especially as we are have embarked in an era of accelerated Rupee depreciation which will fuel imported inflation, given our dependency on the out- side world for well nigh almost all essential commodities.

Assuming, regular increases of the new CSG financed topup contributory pension, payable from age 65, this pension will become the main one on which pensioners will depend on in the future, as inflation progressively completely erodes the worth of the permanently frozen BRP of Rs 9,000.

In effect, what the reform does is to make the reformed universal BRP contributory and progressively and materially change the eligibility to it from age 60 to age 65, for the reasons stated above.

Of note also, is that whilst NPF is a funded scheme with contributions invested to meet future liabilities, the reformed CSG pension will be operated on a pay-as-you-go basis from the Consolidated Fund, same as the current BRP.

“It would be inequitable to require only private sector workers to pay for the reformed CSG top-up pension.”

Now for the nomenclature. Why is it ‘généralisée’, I’ve been asking myself. I believe the penny has dropped. It would be inequitable to require only private sector workers to pay for the reformed CSG topup pension, whereas it would be payable to every pensioner over age 65, including public sector employees, who do not currently participate in NPF. Hence, my understanding, which has necessarily to be correct on grounds of equity and equality of treatment, is that public sector workers also will be liable to pay CSG. Voilà, pourquoi c’est ‘généralisée’! Let’s now wait for the reactions of their trade union representatives!

Another difference between NPF and CSG pensions is that under NPF, benefits derived are proportional to contributions made during one’s working career based on a points system. Under the CSG system, there is no correlation or proportionality between contributions made, which can be substantial (Rs 90,000 a month for a private sector worker earning Rs 1 million monthly salary!) whereas every beneficiary aged 65 and over earns a top-up of just Rs 4,500 monthly as from 01 July 2023. Voilà pourquoi c’est ‘sociale’!

In the Budget estimates, for 2020/21, revenue line item 12, Social Contributions, shows an increase of Rs 3 Bn over 2019/20. Since CSG is payable only from 01 September 2020, this figure is only for a period of 10 months. So, the yearly revenue yield of CSG is estimated at Rs 3.6 Bn, which, per my calculations appears to be underestimated, considering that as per National Accounts published by Statistics Mauritius, earnings from employment are 40% of GDP. Based on 2019 GDP of Rs 500 Bn, income from employment in that year was Rs 200 Bn.

Be that as it may, assuming a flatlined annual CSG crop yield of Rs 3.6 Bn between 01 September 2020 and 01 July 2023 when first CSG pensions will be payable, the Treasury will have raked in a total of Rs 10.2 Bn over that period.