adminThe contribution period and insurable earnings of contributors to the national pension fund affect the amount of not only retirement pensions but retirement grants and indeed all pensions and grants payable under the Pension and Other Benefits Scheme. The formula that is used by NSSA in calculating a retirement grant is one-twelfth multiplied by the annual insurable earnings multiplied by the total contribution period divided by 12.
Included in the total contribution period are credits, for those entitled to them. Credit years are provided for anyone who joined the scheme on inception and was already aged 49 and above as at October 1 1994, which was when the pension scheme became operational. It applies, therefore, to those born in or before September 1945.
They are calculated by subtracting 49 from the age of the person as at October 1 1994. A maximum of seven years credits are allowed.
Credit years are also taken into account when calculating retirement pensions. A minimum contribution period of 10 years, including credits, is required for a retirement pension. A retirement grant, which is a lump sum payment, is payable for those who have contributed for less than that but for at least 12 months.
Since those aged 49 or above when the scheme came into effect would now be more than 68 years of age, the credits now only apply, where new claims are concerned, to those who have claimed their retirement benefit late.
The retirement benefit, whether it is a pension or grant, can normally be claimed at age 60 or above, if one is retired, or at age 65, whether one is retired or not. At age 65 contributions to the pension fund, for those still working, should no longer be paid. Only contributions made up to the age of 65 are included in calculating a person’s benefit.
There is an early retirement age of 55 for those who were employed for at least seven of the 10 previous years in agriculture or some other job classified by NSSA as arduous, such as quarrying, heavy truck driving and some mining and forestry jobs.
A pension should be claimed within 12 months of a contributor becoming eligible for it. Late pension claims are still considered but are only payable with effect from the date on which NSSA received the claim.
Grants should be claimed within five years. Grant claims received later than this are normally not considered at all. However, for this year only that restriction has been suspended, meaning that grants that have not been applied for within the maximum claim period of five years can be applied for this year. Even grant claims previously submitted that were rejected on the grounds that they had been submitted late can be resubmitted this year.
However, it is only this year that grant claims can be submitted later than five years after the contributor or the contributor’s surviving spouse or other dependant became eligible for it. No late grant claims submitted after December 31 2014 will be entertained.
The reason for this concession, whereby a grant can, for the limited period of between January 1 and December 31, 2014, be claimed, even if it is more than five years after the claimant became eligible for it, is that it became apparent to NSSA that many people had failed to apply for a grant within the five year period because they had not realised they were eligible for it.
As more people have come to understand the benefits available under the NSSA Pension and Other Benefits Scheme, lots of claims or enquiries were being received from people who should have claimed much earlier but did not do so because they were unaware they were entitled to a grant.
To achieve this concession required the gazetting of a statutory instrument suspending the statutory time limit for grant applications. The suspension was for the period January 1, 2014 to December 31, 2014. That means that as from January 1 next year, the normal time limit applies once more.
The survivor’s grant paid to the spouse of a deceased contributor is 40 percent of the grant that the contributor would have been entitled to had he qualified for the retirement grant at the time he died. In other words it is one-twelfth multiplied by annual insurable earnings multiplied by the total contribution in months divided by 12 multiplied by 40 percent. The same formula is used to calculate the survivor’s grant for the children of the deceased contributor.
A contributor who is single and has no children can register other dependants with NSSA. These could be parents or other relatives who were genuinely financially dependent on the contributor. If the dependants are parents, they receive a survivor’s grant of 12 percent of the grant the contributor would have been entitled to. Any other registered dependants receive eight percent subject to proof of dependency.
An invalidity grant is calculated using the formula of one-twelfth multiplied by total insurable earnings multiplied by the contribution period in months divided by 12, including credits. Credits for the invalidity grant are calculated by subtracting the person’s age at invalidity from 60 and dividing it by two.
An invalidity grant is payable to a person below the age of 60 permanently incapable of work due to a physical or mental illness or disability who has contributed to the national pension scheme for at least six months but less than 12 months. If the contribution period is 12 months or more, then an invalidity pension is payable.
Both the contribution period and the individual’s insurable earnings affect, therefore, the amount of all grants and pensions. The formula for calculating retirement pensions, which is 1,333 percent multiplied by monthly insurable earnings at retirement multiplied by the contribution period, has been given in this column before. The longer the contribution period and the higher the insurable earnings, the higher will be the pension or the grant.
Talking Social Security is published weekly by the National Social Security Authority as a public service. There is also a weekly radio programme on social security, PaMhepo neNssa/Emoyeni leNSSA, which this evening will be a phone-in programme on Radio Zimbabweat 6.30PM, during which listeners can phone in their questions. There is another social security programme on Star FM on Wednesdays at 5.30PM. Readers can e-mail issues they would like dealt with in this column to [email protected] or text them to 0772-307913. Those with individual queries should contact their local NSSA office or telephone NSSA on (04) 706523/5, 706545/9, or 799030/1.
Online Reporter