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next month.
The increase will see retirees getting a monthly payment of $60 up from $40. Survivors and invalidity pensions would also go up from $20 to $30.
Those who retire in January who have been earning $500 a month and contributing continuously to the scheme from inception for 17,25 years, would receive a pension of $115, while those who have contributed for the same period and were earning $1 000 at the time of retirement would receive a pension of $230.
In a statement, NSSA said the increase in pensions has been made possible by the gazetting of regulations increasing insurable earnings limit for NSSA pension contributions.
“NSSA pensions will be going up next year, with the minimum monthly retirement pension being $60 and the pensions of those who retire on a salary of up to $1 000 a month being calculated on the basis of their actual salary,” read the statement.
“The $60 minimum retirement pension represents a 50 percent increase from the present 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 by the gazetting on Friday 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 three percent each to four percent.”
NSSA pensions are calculated by multiplying the insurable earnings of the pensioner at retirement by the number of years an employee has contributed by a factor of 1,333 percent.
The replacement value, the cost of replacing an asset in the case that it is damaged or destroyed, 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 percent.
NSSA said the pensions of 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,” read the statement.
“Those earning above $1 000 will receive the same pension as those who are earning $1 000, which, as from 1 January, 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 four percent of the salary, up to a maximum monthly insurable earnings limit of $1 000. The employer will also be required to make the same four percent contribution and remit the total eight percent of insurable earnings to NSSA.”
The pensions authority also said the contribution of those earning more than $1 000 per month will be limited to eight percent of $1 000 divided equally between employer and employee, which is $40 from the employee and $40 from the employer.
Over the years NSSA has come under fire from pensioners for paltry payouts.