adminIt has been at that level 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 US$30. From time to time there are newspaper articles that are written highlighting on the plight of pensioners. Most of the information used in these articles is outdated. There appears to be no effort to check the current position regarding pension thresholds, which is causing confusion among the reading public. This was the case in a recent article.
According to the article the minimum pension being paid to “pensioners already on Government payroll before April 1, 2009” was US$25. The article also states that pensions range from “a paltry US$40 to as much as US$1 447”. Both minimum pensions given in the article are incorrect.
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 US$25. When the minimum was increased to US$40, retirement pensions were increased to US$40. In the same way, when the minimum retirement pension was increased in August last year to US$60 the pension of everyone whose retirement pension was below US$60, including those on the previous minimum pension of US$40, was increased to US$60.
The only people receiving social security pensions from NSSA who receive a pension of less than US$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, 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 US$30, which is 50 percent of the minimum retirement pension. The minimum invalidity pension is also US$30.
Nobody receives a National Pension Scheme survivor’s or invalidity pension that is below US$30. Nobody receives a National Pension Scheme retirement pension that is below US$60.
The minimum pension of US$60 is the same as the pension that would be paid to a person with insurable earnings of US$250 a month who retired now after contributing to the scheme for 18 years. Those who have contributed for the same length of time who retire with higher insurable earnings than that receive a higher pension.
At present there is a maximum insurable earnings level of US$700 per month. Prior to that it was US$200. Anyone who retired with insurable earnings of US$200 now receives the minimum pension of US$60.
This means the insurable earnings of those earning US$700 and any amount that is less than that are the same as the contributor’s basic earnings. For those earning more than US$700 the insurable earnings are US$700.
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.
There will be a lot of people falling into that category. With a maximum insurable earnings limit of US$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 US$48.
With the increase in the minimum pension to US$60, these pensioners are now receiving US$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 US$500 or even more than US$1 000. Contributions were based on actual earnings and so were the pensions of those who retired then.
Talking Social Security is published weekly by the National Social Security Authority as a public service. There is also a weekly radio programme, PaMheponeNSSA/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 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) 706517-8 or 706523-5.
Online Reporter