NSSA pension contribution increase takes effect

The National Social Security Authority has reminded employers and employees that the national pension scheme contribution rate and insurable earnings ceiling go up with effect from this month.

"We would like to remind employers that they are required to apply the new employee contribution rate of 3,5 percent of each employee's basic earnings up to a maximum insurable earnings level of $700, when making deductions for the pension scheme from employees' June salaries," a spokesperson said.

"Employers are also required to contribute 3,5 percent of the employee's insurable earnings themselves and remit to NSSA in the normal way by July 10 the combined total of seven percent of each employee's basic earnings up to the new maximum insurable earnings level of $700 per month," the spokesperson said.

Previously the employer and employee each contributed three percent of the employee's basic earnings up to a maximum insurable earnings limit of $200.  That meant the maximum pension contribution paid by an employee was six dollars, which applied to all those earning $200 and above.

Now the maximum employee's contribution is $24,50, which applies to those earning $700 per month and above. The employer pays the same contribution as the employee.

The new contribution rate and insurable earnings ceiling, which take effect from June 1, were gazetted last month along with new minimum pensions, which come into effect in August.

The new minimum pensions are $60 for retirement pension and $30 for invalidity and survivor's pension respectively.

Although the new minimum pensions only take effect in August, those retiring before then who are paying the new contribution rate will have their retirement benefit calculated on the basis of their insurable income when they retire as well as on their contribution period.

For those earning between $200 and $700 the insurable earnings will now be their basic earnings, rather than $200 which was the previous maximum insurable earnings limit. For those earning above $700 the insurable earnings will be $700.