THE National Social Security Authority (NSSA) has announced plans to hike workers’ pension contributions by 1% with effect from next month, a move that is likely to leave impoverished workers worse off.
Report by Staff Reporter
Zimbabwean workers are already some of the most heavily taxed in the world.
In a statement released yesterday, NSSA also announced plans to increase minimum retirement pension benefits from $40 to $60 with effect from August 1. NSSA said the minimum survivor’s pension and invalidity pension would also go up from $20 to $40.
The increase in the pension contributions come at a time when most employees are struggling to make ends meet as they earn salaries below the poverty datum line estimated at $550.
“The contribution rate goes up in June from 6% to 7% of insurable income, with half of the contribution coming from the employee and half from the employer,” reads part of the statement.
“This means the employee and employer each pay 3,5% instead of the current 3%.”
Employees who become eligible for a social security pension after next month will earn substantially higher pensions if they earn between $350 and $700 and have been contributing to the pension scheme since its inception about 18 years ago.
The development follows the gazetting of Statutory Instrument 61 of 2013 published last Friday.
A person retiring with insurable earnings of $700 who has contributed to the pension scheme for 18½ years will receive a pension of more than $172 a month.
“Previously, the same person would have received a pension of just over $49, because the insurable earnings was $200,” the statement reads.
A person retiring with insurable earnings of $350 who has contributed to the scheme for the same length of time will receive a pension of $86.
“The increase in the maximum insurable earnings limit from $200 to $700 per month means that employees and their employers each pay 3,5% of the employee’s basic earnings up to a maximum earnings limit of $700. Those earning above $700 pay the same as those earning $700,” said NSSA.
The increase in minimum pensions means anyone whose retirement pension is currently below $60 will receive $60 per month as from August. Anyone receiving a survivor’s pension or invalidity pension that is below $30 will from August receive $30 per month.