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Several NSSA pension fund members have written to this column giving details of their salary and their contribution period and asking what their retirement pension will be. It is not possible to give a definitive answer because what their pension will be depends on what their monthly insurable earnings will be when they retire, as well as their contribution period at that stage.

Some give the year and even the month in which they will turn 60 but that still does not make it possible to say with certainty what their pension will be, mainly because it is not possible for anyone to know for sure what their insurable earnings will be when they retire.

This is particularly the case where people are earning above the current maximum insurable earnings limit, since it is always possible that limit could have increased by the time they retire.

The best that can be done is to say what the pension would be if a person were to retire after a specified contribution period on their current insurable earnings.

However, the insurable earnings could change, either because of wage increases before they retire or because, for those already earning above the ceiling, the maximum insurable earnings level changes before they retire.

Moreover the person may expect to retire at 60 but in fact end up retiring later than that, which would lengthen the contribution period.

Contributions to the pension fund for at least 120 months are required for a pension to be paid.

Those who retire with a contribution period of less than that are eligible instead for a lump sum retirement grant, provided they have contributed for at least 12 months.

The age at which most people will claim their pension will be when they are over 60, unless they work in one of a number of arduous jobs which qualify them for early retirement at 55.

However, to be eligible for a retirement benefit one must be not only 60 years of age or older, or 55 for those in arduous jobs, but retired, except when one is 65, at which age the benefit is payable whether or not one is still working.

It would be possible for those earning $700 or less who are certain about the date they will retire and their contribution period by then and certain that their wage is unlikely to be different when they retire from what it is now to calculate their pension, since a fixed formula is used that includes the contribution period and insurable earnings at retirement.

The formula is the number of contribution years, including fractions of a year, multiplied by the monthly insurable earnings at retirement multiplied by 1,333 percent.

The insurable earnings of those earning under $700 a month are the same as their basic wage.

However, a person’s wage could have been increased by the time he or she retires, which would mean their insurable earnings would be more then than they are now.

The insurable earnings of those earning more than $700 per month are $700, because that is the maximum insurable earnings limit at the moment.

Those earning more than $700 per month who are likely to retire in the next few months would confidently be able to work out what their pension will be, provided they are certain of what their contribution period up until then would be.

However, those earning above $700 who are not due for retirement for a few years can be less certain about what their pension will be.

They could calculate what it will be if their insurable earnings remain $700 but there is always the possibility that the insurable earnings limit could have been increased by the time they retire.

The good news is that, if it does, they will receive a higher pension than they would have received had it not gone up.

The NSSA pension scheme is designed in such a way that it is anticipated that the contribution rate will be gradually increased over the years and any maximum insurable earnings limit in place will also be revised from time to time. When such changes will take place is difficult to anticipate.

This is because such changes are normally only proposed when recommended by an independent actuary, who reviews the pension scheme periodically as prescribed after every three years, and when not only the NSSA board has agreed to the changes but the Minister of Labour and Social Services, after consulting the Minister of Finance, has agreed to the changes and gazetted them.

The monthly maximum insurable earnings a year ago were only $200, which severely limited the pensions of those earning above $200 when they retired.

In June last year the maximum insurable earnings limit was raised to the current $700 a month, at the same time as the contribution rate was raised, resulting in higher pensions. The minimum retirement pension was also raised from $40 to $60.

Those who find themselves already unemployed and unlikely to obtain new employment as they approach 60 years of age may be able to work out their likely pension based on their monthly insurable earnings in their last employment and their contribution period.

Those who are still in employment might like to consider whether they want to retire at age 60 or continue working for longer, possibly up to the age of 65 and beyond.

The longer they work the longer their contribution period and the higher the possibility there is of the insurable earnings ceiling being raised before they retire, which, if they are earning above $700 a month, would increase their insurable earnings, thereby also increasing the pension they could expect.

At age 65, however, contributions to the pension fund should cease and the person should claim the pension.

Contributions made after reaching the age of 65 are not considered in calculating the contribution period and are refundable.

Talking Social Security is published weekly by the National Social Security Authority as a public service. This evening the weekly radio programme PaMheponeNssaEmoyeni le NSSA, is a live phone-in programme that begins at 6.30pm on Radio Zimbabwe. There is another social security programme on Star FM on Wednesdays at 5.30 pm. Readers can e-mail issues they would like dealt with in this column to mail@mhpr.co.zw or text them to 0772-307913. Those with individual queries should contact their local NSSA office or telephone NSSA on (04) 7065235, 7065459, or 7990301.

Source : The Herald

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