adminContributing to a pension scheme is something they often do simply because they have to. If they are required to join an occupational pension scheme, they are happy, when they leave their job, to have their pension contributions refunded.
They forget that having pension contributions refunded means you no longer having a pension. The refunded contributions may seem a useful lump sum to have but they soon disappear.
Each time they change a job they have to join a new pension scheme. Each time they leave a job and are refunded their pension contributions they are left without the security of a pension in their old age.
The national pension scheme administered by the National Social Security Authority is different from other pension funds. Membership is compulsory for all those in formal employment, other than domestic workers.
Because it embraces all formal employment, there is no refund of contributions when one leaves a job. One’s retirement benefit contributions remain intact. So does the pension or grant one can look forward to receiving in one’s old age.
To qualify for the pension one has to have contributed for at least 120 months by the time one reaches retirement. If one has contributed for less than that the retirement benefit is a single lump sum grant, provided one has contributed for at least 12 months.
When one moves to a new job, a form is completed and submitted to NSSA through one’s employer to inform NSSA of the change of job. Pension contributions continue in the new job in the same way as they did in the old one. The longer the contribution period and the higher one’s insurable earnings when one retires, the larger the benefit can be expected to be.
Those who begin work soon after leaving school or when they are in their early twenties could end up with a pension that is between 60 and almost 80 percent of their insurable earnings on retirement, depending on how long they have contributed to the pension scheme for.
So, while those who are young cannot be expected to appreciate the importance of a pension, they will no doubt appreciate the value of their monthly contributions to the pension scheme when they come to retire, if they have been contributing to it throughout their working lives.
NSSA pensions may seem modest at the moment but that is because the scheme has not been going long enough for anyone to have contributed to it throughout their working lives and because of the low insurable earnings ceiling, which, with time, should gradually be raised. The scheme is designed to benefit most those who contribute to it for the whole or most of their working lives.
Those who begin work after leaving school or university and so begin paying a monthly social security contribution to NSSA when they are 18, 19 or in their early 20s are likely to benefit most. They could end up contributing for 40 to 47 years, if they take late retirement at age 65, and so have a pension between 63,33 percent and 79,9 percent.
In the event of one’s dying before reaching retirement age, one’s spouse and children or other dependants registered with NSSA will be entitled to a survivor’s pension or grant, depending on how long one’s contribution period has been.
The spouse or other registered dependant of a person who is drawing a pension will likewise be entitled to a survivor’s pension in the event of the pensioner’s death. However, a pensioner’s widow or widower must have been already married to the pensioner before he or she retired in order to qualify for this benefit. The pension scheme also pays a funeral grant of US$200 to the person paying for the funeral of a contributor to the scheme or a pensioner.
Where a pension scheme contributor under the age of 60 becomes incapable of working due to a physical or mental illness or disability, an invalidity pension is paid, provided the person has been contributing to the scheme for at least 12 months. If he or she has contributed for between six and 12 months, an invalidity grant is payable.
The invalidity pension and survivor’s pension is normally 40 percent of the retirement pension. However, the minimum invalidity pension and survivor’s pension is US$20, which is 50 percent of the minimum retirement pension.
The Workers’ Compensation Insurance Fund, which NSSA also administers, pays out compensation where a person suffers loss of income as a result of an accident at work. This may include a pension if the accident results in a permanent disability. Only the employer contributes to the Workers’ Compensation Insurance Fund.
To be sure of securing retirement and other benefits under NSSA’s Pension and Other Benefits Scheme, it is important to register with NSSA and to ensure your pension scheme contribution is deducted each month from your salary. The employer is required to match your contribution and to remit the combined contribution to NSSA each month.
It is also the employer who is responsible for ensuring every employee registers with NSSA. When you start a job, your employer should give you a P3 form to complete. If you have worked elsewhere and know your social security number, that should be included on the form together with previous employment details.
l Talking Social Security is published weekly by the National Social Security Authority as a public service. There is also a weekly radio programme, PaMhepo neNssa/Emoyeni le NSSA, discussing social security issues at 6.50 pm every Thursday on Radio Zimbabwe and every Friday on National FM. There is a similar programme on Star FM every Wednesday between 5.50 and 6pm. Readers can e-mail issues they would like dealt with in this column to [email protected] or text them to 0772 307 913. Those with individual queries should contact their local NSSA office or telephone NSSA on (04) 706517-8 or 706523-5.
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