adminto the pension scheme since its inception, will receive substantially higher pensions than they would have done had they retired earlier.
This follows the gazetting last Friday of a new contributions rate and new maximum insurable earnings limit of US$700, which take effect from next month.
NSSA had been previously criticised over the meagre pension benefits it has been giving retirees, which fell far short of a modest payout needed to sustain the lives of beneficiaries.
The social security authority argued that because it had been collecting very little from contributors, it also had a small pool of resources that is unable to sustain higher benefits.
A retiring worker who has insurable earnings of US$700 and has contributed to the pension scheme for 18 and half years will receive a pension of at least US$172 a month.
The same person would have received a benefit of just about US$49 when the insurable earnings were only US$200.
A person retiring with insurable earnings limit of US$350 who has contributed to the pension scheme for the same period would receive a pension benefit of US$86.
The minimum retirement pension goes up from US$40 to US$60 from August 2013. The minimum survivor’s pension and invalidity pension goes up from US$20 to US$40.
Pensions are calculated on the basis of a contributor’s insurable earnings at retirement and the contribution period.
The contribution rate goes up in June from 6 percent to 7 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 pays 3,5 percent instead of the current 3 percent.
The increase in the maximum insurable earnings limit from US$200 to US$700 per month means that employees and their employers each pay 3,5 percent of the employee’s basic earnings to a maximum earnings limit of US$700.
Those earning above US$700 pay the same as those earning US$700.
As pensions are calculated on the basis of the individual’s insurable earnings at retirement and contribution period, those earning up to US$700 will have their pensions calculated on the basis of their basic earnings.
Those earning above U$700 will have their pensions calculated on the basis of their insurable earnings of US$700.
With the current insurable earnings limit set at US$200, anyone earning above US$200 who, at retirement, was paying contributions based on that limit receives a pension based on the US$200 and the contribution period.
The increase in minimum pensions means anyone whose retirement pension is currently below US$60 will receive US$60 per month as from August.
Anyone receiving a survivor’s pension or invalidity pension that is below US$30 will from August receive US$30 a month.
Online Reporter