NSSA increases pension benefits

Published: 10 June 2013

Those who become eligible for a social security pension after next month will, if they are earning between $350 and $700 and have been contributing to the pension scheme since its inception, receive substantially higher pensions than they would have done had they retired earlier.

This is the result of the gazetting last Friday of a new contributions rate and new maximum insurable earnings limit of $700, which take effect next month.

A person retiring with insurable earnings of $700 who has contributed to the pension scheme for 18½ years will receive a pension of more than $172 a month. Previously the same person would have received a pension of just over $49, because the insurable earnings would have only been $200.

A person retiring with insurable earnings of $350 who has contributed to the scheme for the same length of time will receive a pension of $86.

The minimum retirement pension goes up from $40 to $60 from August. The minimum survivor's pension and invalidity pension goes up from $20 to $40.

Pensions are calculated on the basis of insurable earnings at retirement and the contribution period.

The contribution rate goes up in June from six percent to seven percent of insurable income, with half of the contribution coming from the employee and half from the employer. This means the employee and employer each pay 3,5 percent instead of the current three percent.

The increase in the maximum insurable earnings limit from $200 to $700 per month means that employees and their employers each pay 3,5 percent of the employee's basic earnings up to a maximum earnings limit of $700. Those earning above $700 pay the same as those earning $700.

Because pensions are calculated on the basis of the individual's insurable earnings at retirement and contribution period, those earning up to $700 will have their pensions calculated on the basis of their basic earnings. Those earning above $700 will have their pensions calculated on the basis of their insurable earnings of $700.

With the current insurable earnings limit set at $200, anyone earning above $200 who at retirement was paying contributions based on that limit receives a pension based on $200 and the contribution period.

The increase in minimum pensions means anyone whose retirement pension is currently below $60 will receive $60 per month as from August. Anyone receiving a survivor's pension or invalidity pension that is below $30 will from August receive $30 per month.

- MHPR Public Relations Consultants