Government Has Paid P2.7 Billion In BDF Pension Enhancements
Thousands of former soldiers have received enhanced pension transfer values, with government targeting completion of payments to living eligible veterans by September.
Government has so far disbursed P2.7 billion towards enhanced pension transfer values for Botswana Defence Force (BDF) members, with 4,725 claims paid as authorities work to resolve a dispute dating back more than two decades.
Minister of State President, Defence and Security Moeti Mohwasa told Parliament last Thursday that the overall cost of the exercise is projected at P4.1 billion.
The payments stem from government’s decision to enhance the transfer values of BDF members who were in service before April 1, 2001, following an actuarial assessment that found the existing pension arrangement had failed to adequately account for mandatory early retirement in the military.
Actuarial Review Led To N/375 Adjustment
The BDF pension dispute dates back to 2001, when the military moved from a Defined Benefit Scheme to a Defined Contribution Fund aligned with the Botswana Public Officers Pension Fund (BPOPF).
The transition subsequently became the subject of legal disputes and class-action litigation over transfer values and benefit calculations.
Mohwasa said a government-commissioned actuarial study completed in 2017 found that the pension denominator applied to BDF members should have been adjusted from n/600 to n/375.
The adjustment was intended to reflect the treatment of public service pensions, where the denominator had been changed from n/720 to n/450 in 1998.
A lower denominator produces a higher pension benefit.
Government resolved in March 2024 to enhance the transfer values of qualifying BDF members, with the payments backdated to January 1998. Statutory Instruments 52 and 53 of 2024 were subsequently issued to facilitate the process.
Government teams were later deployed across the country to update records, verify identification and banking information and gather details concerning deceased members.
Thousands Of Claims Already Paid
Initially, 5,767 separated members and beneficiaries of deceased members registered and submitted the required information.
Following verification by the Accountant General and actuarial calculations by National Medical Group (NMG), the projected number of eligible BDF members increased to 8,951.
As of August 14, NMG had received 5,979 files from the Accountant General and had processed payments for 4,725 claims. These comprised 4,436 retirees, 255 beneficiaries of deceased members and 34 former members who had withdrawn or resigned.
Mohwasa said government was targeting completion of payments to all living eligible veterans by the end of September.
Payments relating to deceased veterans are expected to continue until the end of the year because of estate administration requirements.
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“The BDF Pensions matter is a longstanding and sensitive one. While concerned parties have every right to raise their apprehensions, I appeal for continued patience and good faith as Government works through the legal and administrative processes required to reach a durable resolution,” Mohwasa said.
He also cautioned against treating the pension dispute as a single issue, saying the n/375 enhancement was only one part of the broader controversy.
Other Pension Disputes Remain Unresolved
One unresolved issue involves former soldiers known as the “Forgotten Soldiers”, who were transferred from the old Defined Benefit Scheme to BPOPF while already receiving monthly pensions.
The group has raised concerns that the transfers occurred without their consent.
Mohwasa said there was currently no evidence establishing that consent had been obtained or showing the transfer values used when the members were migrated to BPOPF.
He has instructed BPOPF to recalculate their transfer values, with that process expected to be completed by the end of August.
Another dispute involves veterans who are legally required to purchase annuities instead of receiving their pension benefits as a lump sum.
Mohwasa said 182 members had been required to purchase annuities, while 56 had rejected the arrangement and were seeking full payment, citing their advanced age and financial circumstances.
The Ministry of Finance is engaging the Attorney General on possible legally sustainable options for resolving the issue.
Meanwhile, government is negotiating with veterans who are challenging their migration to BPOPF through court proceedings.
An independent actuarial assessment has been commissioned from Alexander Forbes Financial Services Botswana. The assessment will compare what affected veterans would have received under the former BDF Defined Benefit Scheme with the benefits available under BPOPF, including the n/375 enhancement.
Mohwasa said the findings would help inform government’s decision on future pension arrangements for affected BDF members.
Government also intends to introduce a BDF Act Amendment Bill addressing some of the longstanding pension-related challenges.
Mohwasa said government remained committed to correcting historical administrative shortcomings and finding a durable resolution to the pension dispute.
