The Caisse de Retraites du Togo (CRT)

The Caisse de Retraites du Togo (CRT)

167. 
     CRT was created by Law 91/11 of May 23, 1991 as a public entity in charge of managing the provision of pension services to civil servants and the military (previously, pensions was a department in the Ministry of Labor). This Law provides for its organizational and operational guidelines. Presidential decree 91/208 of September 6, 1991 provides for contributions and benefits rates for the various categories of civil servants. CRT management reports to a Board of Directors, headed by the Minister of Finance with memberships of the Ministry of Labor, The Ministry of national Defense, the Ministry of Social Affairs, the Ministry of State owned Entities, public sector unions and retirees. The Board meets three times a year, approves and supervises the budget, decides on the investment strategy. The Chief Executive Officer (CEO) and Assistant CEO are appointed by the Ministry of Finance, with no specific terms. The 1991 Law provided for its financial independence, however, its treasury management remains with the Ministry of Finance as of today. CRT enjoys the government’s permanent financial guarantee.
     

168. 
     CRT manages a social security regime providing old-age, disability and bereavement benefits, as well as a limited medical insurance scheme (geographically limited to Lomé and to services rendered in public hospitals). Enrollment is automatic upon hiring of employee. As shown in Table 4.6, CRT covered about 24 800 civil servants in 2002. The number of active troops being confidential since then, it is estimated that the current contributors population is about 29 000. The table also shows that the scheme has reached a mature stage, and that the depreciation of the ratio contributors to beneficiaries is currently less than 2 to 1. As we will see in the financial performance section, the increasing cost of servicing pensions, while contributions income steadily decrease negatively affects the scheme’s treasury position
     

169. 
     The contribution rate of 7 percent for CRT is deducted from civil servant payroll, and has not changed since 1991. The government’s matching is a generous 20 percent, which brings the total contribution rate to 27 percent. This rate appears very high when compared with that paid to CNSS. Contributions and benefits are tax free.
     

170. 
     The benefits structure of CRT is extremely generous when compared to contributions. The inexistent link, associated with an unfavorable demographic situation, has clearly led to the current problematic funding situation. Table 4.7 displays the standard benefit formula. However, many exceptions to the rule are allowed in the 1991 law and include:
     

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  A lower retirement age, varying from 50 to 53 years old, according to the civil servant category (e.g. for policemen or customs officers).
  
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  A right to early retirement for the military as long as they reach 33 years of age with 15 years of service. In addition, each year in the army is considered 1 and 1/3 year.
  
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  A right to early retirement for all civil servants when they reach 50, with 15 years of service. Missing years are being “topped up” automatically with no financial equivalent.
  
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  Women are credited one free year towards retirement per child, with a maximum of 6 years credit.
  
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  A one year salary paid as a one-off “bonus” upon retirement.
  

171. 
     CRT current financial situation is extremely critical. Table 4.8 presents a summarized cash flow statement since 2000, the year when the treasury deficit started building up. The current deficit of nearly CFAF 7 billion can be explained by the following:
     

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  Government contributions arrears amounting to CFAF 21.3 billions.⁴³
  
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  On a purely technical basis, benefits payments represent twice the amount of contributions.
  
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  Total outflows increased by 34 percent over 2000-2004, while income decreased by 10 percent over the same period.
  
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  Likewise, interests from financial assets decreased by 35 percent. This is due to the fact that since 2000, CRT has started calling on its reserves to be able to meet its monthly benefits payments.
  

172. 
     The current monthly pension bill is about CFAF 1.1 billion. Contributions from the various ministries responsible for collections amount to only CFAF 485 millions. The financial gap of CFAF 615 million is filled by taking from the reserves placed with the MOF. As a result, CRT’s reserves have dropped from CFAF 24.5 billion in 1998 to 3.6 billion en 2005. It was anticipated that by April 2006, CRT would not be able to meet its obligations with its own funds and that the state guarantee would have to kick in. CRT has very little assets, both physical and financial. It does own some un-built land, but it rents its headquarters. Financial assets are held in short-term deposits earning 4 percent to 5.5 percent interest per annum.
     

Notes: * Retained salary contributions from employees and employers

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