The Namibian government could save N$670.5 million in personnel related expenditure if it moves ahead with plans to implement early retirement for civil servants between the ages of 55-59 years, financial services company, First Capital Namibia has said.
According to the company in its Namibia Fiscal Policy Analysis for March 2019, governments implementation of early retirement could reduce about eight percent of its budget deficit.
“The civil service has a staff composition of 91,295 as of April 2018. Six percent or 5,478 of the total number of civil servants are aged between 55-59 years. The government spends $29.3 billion on personnel related expenditures of 91,295 civil servants which translates to an average N$306,000 cost to government for each civil servant. Of the 5,478 civil servants aged 55-59 years, any retirement that would attract at least 40 percent of this group would save government at least N$670.5 million in personnel related expenditure equivalent to 3 percent of the wage bill,” the First Capital Namibia report said.
The report noted the proposed plan to offer early retirement could go a long way in reducing government’s personnel related expenditure.
“In the long run, this measure combined with other measures will place Namibia at a sustainable fiscal position to contain expenditure and reduce debt.”
The First capital report, however, warned the Government Institutions Pension Fund (GIPF) could be forced to fork out billions in pensions payouts if the government plan gains traction among civil servants.
“On the other hand, the same situation would cost the government pension fund N$1.62 billion in pension payouts,” the report said.
In 2017, the government announced that it was looking at offering early retirement packages for civil servants who wish to retire before the age of 60 as one of the proposed plans to cut its wage bill.
First Capital Namibia is a financial services company specialized in providing asset management, investment banking and property management services.