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The minimum national social security retirement pension is $60. It has been $60 since August last year, following an increase in June in the contribution rate and maximum insurable earnings. The minimum survivor’s pension and invalidity pension is $30.
From time to time newspaper articles appear on the plight of pensioners in which outdated information is quoted on NSSA pension levels, no doubt gleaned from a quick look through newspaper cuttings from several years back without checking the up-to-date position, causing confusion among the reading public.
One such article appeared recently. It said, incorrectly, that the minimum pension currently being paid to “pensioners already on government payroll before April 1, 2009” was $25. Elsewhere the article said pensions range from “a paltry $40 to as much as $1,447”. Both minimum pensions given in the article are incorrect. They are old minimum pensions not the current minimum, which is $60.
National Pension Scheme retirement pensions depend on the pensioner’s contribution period and insurable earnings on retirement.
Where the pension calculated on that basis falls below the level of the minimum pension, then the minimum pension is paid. The minimum pension is currently $60.
The pension awarded by NSSA does not remain the same for life. It is adjusted, after actuarial advice, depending on the rate of inflation. When the rate of inflation is low and stable, there may not be need to increase pensions in payment save for the minimum pension that is revised upwards more frequently.
If a pension falls below a newly declared minimum pension then it is increased to the new minimum pension level.
There was a time when the minimum retirement pension was $25. When the minimum was increased to $40, then the pension of everyone whose retirement pension was below $40, including those who had been receiving the previous minimum pension of $25, was increased to $40.
In the same way, when the minimum retirement pension was increased in August last year to $60 the pension of everyone whose retirement pension was below $60, including those on the previous minimum pension of $40, was increased to $60.
Anyone retiring since then whose pension would be below $60, when calculated on the basis of the contribution period and insurable earnings on retirement, receives a $60 pension.
The only people receiving social security pensions from NSSA who receive a pension of less than $60 are those who receive a survivor’s pension or invalidity pension that is below that level.
The survivor’s pension, which is generally paid to the surviving spouse and children of a deceased contributor or pensioner, is normally 40 percent of the pension that the pensioner was receiving or that the contributor would have been entitled to based on the contribution period and insurable earnings at the time of death.
The spouse receives 40 percent of the deceased contributor’s pension entitlement. The children also receive 40 percent.
Where the surviving family consists of a spouse and children, therefore, it receives a total of 80 percent of the pension the contributor would have been entitled to.
Where there is no spouse or children the pension is payable to other dependants, such as parents, if they were registered with NSSA as dependants.
The minimum survivor’s pension is $30, which is 50 percent of the minimum retirement pension. The minimum invalidity pension is also $30.
Nobody receives a National Pension Scheme survivor’s or invalidity pension that is below $30. Nobody receives a National Pension Scheme retirement pension that is below $60.
These are minimum pension levels. The standard formula that NSSA uses to calculate a person’s retirement pension is the multiplication of the number of contribution years by the insurable income on retirement by 1,333 percent.
Only where the pension so calculated falls below $60 is the minimum $60 pension applied.
The minimum pension of $60 is the same as the pension that would be paid to a person with insurable earnings of $250 a month who retired now after contributing to the scheme for 18 years.
Those contributing for the same length of time who retire with higher insurable earnings than that receive a higher pension.
A person’s insurable earnings are the earnings on which pension contributions are calculated.
At present there is a maximum insurable earnings level of $700 per month. This means the insurable earnings of those earning $700 and any amount that is less than that are the same as the contributor’s basic earnings. For those earning more than $700 the insurable earnings are $700.
The higher the level of insurable earnings and the longer the person has contributed the higher the pension.
A minimum of 120 months contributions are required to be eligible for a pension.
A grant is payable where contributions have been less than that, provided there have been at least 12 months of contributions.
The maximum insurable earnings level was raised to $700 last June. Prior to that it was $200. Anyone who retired with insurable earnings of $200 now receives the minimum pension of $60.
There will be a lot of people falling into that category. With a maximum insurable earnings limit of $200 in place between May 2010 and May 2013, nobody who retired during that period would have received a pension, even after 18 years of contributions, that was more than $48. With the increase in the minimum pension to $60, these pensioners are now receiving $60 per month.
Between 2009 and early 2010 there was no insurable earnings limit. During that period everyone’s insurable earnings were the same as their actual basic earnings.
That is why some pensioners are receiving more than $500 or even more than $1 000. Contributions were based on actual earnings and so were the pensions of those who retired then.
The pension that future retirement pensioners will receive will, as with current and past pensioners, depend on their contribution period and insurable earnings on retirement. It may depend too on what the minimum pension is, where the calculated pension falls below that minimum. The minimum at present is $60.
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 another social security programme on Star FM on Wednesdays at 5.30 pm. Readers can email issues they would like dealt with in this column to [email protected] <mailto:[email protected]> or text them to 0772307913. Those with individual queries should contact their local NSSA office or telephone NSSA on (04) 706517-8 or 7065235.
Online Reporter