The National Social Security Authority says pensions will go up next year, with the minimum monthly retirement pension being $60.
Pensions of those who retire on a salary of up to $1 000 a month would be calculated on the basis of their actual salary.
In a statement, NSSA said this meant employees who retire in January and have been earning $500 a month and contributing continuously to the scheme from inception, that is for 17,25 years, will receive a pension of $115.
Those who have contributed for the same period and who are earning $1 000 at the time they retire will receive a pension of $230.
The $60 minimum retirement pension represents a 50% increase from the current minimum pension of $40. The minimum survivor’s pension goes up from $20 to $30, as does the minimum invalidity pension.
The increase in pensions has been made possible following the gazetting of regulations increasing the insurable earnings limit for NSSA pension contributions to $1 000 per month, as from January 2012, and increasing the employee and employer contribution rate from 3% each to 4%.
NSSA pensions are calculated by multiplying the insurable earnings of the pensioner at retirement by the number of years he or she has contributed by a factor of 1,333%.
The replacement value of the pensioner’s insurable earnings increases with the maturing of the scheme and the increase in the number of years the pensioner has contributed to the scheme. After 17 years of contributions, the replacement rate is 22,6%.
The pensions for those who retired this year were kept low by an insurable earnings ceiling of $200.
As a result, a person earning more than $200 who had been contributing for 17 years only received the same pension as a person earning $200, which amounted to $45.
As from January 2012 any pensioner whose entitlement, as calculated by the normal formula, would be below $60 will receive the new minimum pension of $60.
Those who retire while the new regulations are in force will, if they have been contributing for 17,25 years and are earning $263 and below, receive a pension of $60.
Those earning above $263 will receive more.
Those earning above $1 000 will receive the same pension as those who are earning $1 000, which, as from January 1, is the new insurable earnings limit.
The new regulations mean that as from January employers will be required to deduct from each employee’s salary 4% of the salary, up to a maximum monthly insurable earnings limit of $1 000.
The employer will also be required to make the same 4% contribution and remit the total 8% of insurable earnings to NSSA.
The contribution of those earning above $1 000 per month will be limited to 8% of $1 000 divided equally between employer and employee, that is $40 from the employee and $40 from the employer.