This is the result of the gazetting last Friday of a new contributions rate and new maximum insurable earnings limit of US$700, which take effect next month.
A person retiring with insurable earnings of US$700 who has contributed to the pension scheme for 18½ years will receive a pension of more than US$172 a month. Previously the same person would have received a pension of just over US$49, because the insurable earnings would have only been US$200.
A person retiring with insurable earnings of US$350 who has contributed to the scheme for the same length of time will receive a pension of US$86.
The minimum retirement pension goes up from US$40 to US$60 from August. The minimum survivor’s pension and invalidity pension goes up from US$20 to US$40.
Pensions are calculated on the basis of insurable earnings at retirement and the contribution period.
The contribution rate goes up in June from six percent to seven 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 pay 3,5 percent instead of the current three 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 up to a maximum earnings limit of US$700. Those earning above US$700 pay the same as those earning US$700.
Because 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 US$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 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 per month.
Post published in: News