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Because the period for which one contributes to the national pension scheme affects one’s retirement pension, it is important to contribute for as long as possible and ensure that when moving from one job to another one’s pension contributions continue.
A major advantage that the national pension scheme has is the fact that it is not related to a particular job. When you start a new job your contribution period continues from where you left off.
When you begin a new job, your new employer should ask you for your social security number and national identification number. The appropriate form should be completed to provide NSSA with details of your new employment.
If you do not know your social security number, the national identification number will be sufficient for NSSA to access your social security number and amend your employment record.
Your NSSA contribution should be deducted from your salary and paid by the employer to NSSA together each month with the employer’s own matching contribution and the Worker’s Compensation Insurance Fund premium, which covers you for injuries from accidents at work.
If no NSSA pension fund contribution is deducted from your salary then you should approach the employer to find out why not. It is compulsory for both the employee and employer to contribute to the pension scheme. It is the employer’s responsibility to pay the joint contribution to NSSA each month, together with the Worker’s Compensation Insurance Fund premium, which is paid by the employer alone.
The minimum contribution period for a retirement pension is 120 months. It is not sufficient to have contributed for nine years and 11 months. A full 120 monthly contributions are required.
Those who have contributed for less still receive a retirement benefit, provided they have contributed for at least 12 months, but it is a lump sum grant, which is paid only once, while the pension is paid every month for the rest of your life.
The size of the pension depends on the contribution period and insurable earnings at retirement.
The longer the contribution period the higher the pension will be, unless the insurable earnings and contribution period are only sufficient to entitle you to the minimum pension.
It is important, therefore, to make sure the contribution period is as long as possible.
There are some employees who suspect that, although their contributions are being deducted from their salaries, their employer may not be forwarding them to NSSA.
They can check what records NSSA has of their employment history. If the previous employer and new employer have both informed NSSA on the appropriate form of your change of status, then this should be reflected in NSSA’s record of your employment.
To do this only requires a visit to the nearest NSSA office with your national identity card. You can also enquire whether contributions are being paid. If not, then you should advise NSSA that contributions are being deducted from your salary.
During periods of unemployment, it is possible to arrange with NSSA to make voluntary monthly contributions. The contribution would be based on your last contribution but you would have to pay double, since you would be paying not only your contribution but the contribution the employer normally pays.
Arrangements to do this have to be made within a short time of leaving employment.
It is also possible for those who are nearing the normal retirement age of 60 to choose to carry on working and contributing to the pension scheme up until the age of 65 in order to increase their contribution period.
The retirement pension, or retirement grant for those who have contributed for less than 10 years, can be claimed once you turn 60, if you have retired. However, it is necessary both to be 60 years old or older and be retired. Anyone over the age of 60 who is still in employment should wait until he or she does retire or turns 65 to claim the retirement benefit.
A contributor who is 65 years of age is eligible for the retirement benefit whether or not still employed.
Contributions are only recognised up to the age of 65. After a contributor has turned 65, he or she should stop contributing to the scheme.
Any contributions paid after that do not count towards the contribution period. They are refundable as contributions made in error.
There is a further possible advantage of delaying one’s retirement until age 65 for those whose earnings are above the maximum insurable earnings limit. It is possible that the limit might be increased by the time they reach 65.
The insurable earnings are the earnings on which a person’s pension scheme contributions are based. The retirement pension is calculated on the basis of the contribution period and the person’s monthly insurable earnings when they retire.
However, there is at present a maximum insurable earnings limit in place. It was $200 between May 2010 and May last year. Since June last year it has been $700. The limit is likely to be increased from time to time, which would benefit those earning above that limit when it comes to their retirement.
In 2009 the maximum insurable earnings limit was abolished. However, it was reinstated by government in May 2010.
It is these two factors, a person’s insurable earnings on retirement and contribution period which determine a person’s retirement pension. If the pension, when so calculated, falls below the minimum NSSA retirement pension, which is currently $60, then what they receive is the minimum pension.
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 le NSSA, at 6.50 PM every Thursday on Radio Zimbabwe and Friday on National FM. 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