NSSA POBS Update: Key Changes Introduced by Statutory Instrument 99 of 2024

NSSA POBS Update: Key Changes Introduced by Statutory Instrument 99 of 2024

The Minister of Public Service, Labour and Social Welfare has issued Statutory Instrument (S.I.) 99 of 2024, cited as the National Social Security Authority (Pension and Other Benefits Scheme (Rates and Benefits)) (Amendment) Notice, 2024 (No. 33). Effective from the date of its publication on May 31, 2024, this amendment introduces significant changes to the Pensions and Other Benefits Scheme (POBS), directly impacting employer contributions, pensioner benefits, and eligibility criteria.

1. New Maximum Insurable Earnings Ceiling

S.I. 99 of 2024 repeals and substitutes the section concerning maximum monthly earnings for contributions:

• Maximum Earnings: The maximum amount of the monthly earnings subject to POBS contributions is now set at Seven hundred United States dollars ($700).

• Payment Currency: Contributions calculated based on this ceiling may be payable in the local currency (ZiG) at the prevailing official interbank rate.

This ceiling is critical for employers, as the 9% total contribution (4.5% employer, 4.5% employee) is applied only up to this limit.

2. Adjustments to Funeral Grant

The notice updates both the value and the eligibility requirements for the Funeral Grant:

• Grant Value: The funeral grant is set at two hundred United States dollars ($200), effective from January 1, 2024.

• Payment Currency: The grant shall be payable in ZiG at the prevailing official interbank bank rate.

• Eligibility for Grant (Section 32): The grant is now payable in respect of a deceased individual who was either:

  • A contributor from whom contributions have been paid for at least 12 months.

  • A person who was in receipt of either an invalidity or retirement pension.

3. Rules for Re-employment of Pensioners (Under 65)

A major clarification has been made regarding individuals receiving a retirement pension who are subsequently re-employed before the age of 65:

• Pension Suspension: The pensioner shall not be entitled to a pension during the period of re-employment.

• Resumption: Payment of the initial pension shall cease from the date of re-employment and resume from the date of retirement from the new re-employment.

• Separate Contribution: The additional employment period shall be treated as a separate contribution that can be claimed separately from the initial claim.

• This rule also applies to individuals who received a retirement grant.

4. Refund of Contributions on Termination

The rules for employees whose employment is terminated before becoming eligible for a pension have been clarified:

• Eligibility for Refund: An employee for whom contributions have been paid for less than 12 months shall, upon termination of employment, be entitled to a refund equal to their contributions.

• Interest: This refund includes interest at the prime bank lending rate.

• Calculation: The interest for the refund must be calculated using the compound interest formula.

   

5. Survivor’s Pension and Family Entitlements

The S.I. also amends several provisions related to survivor benefits:

• Dependent Children: If a contributor leaves no dependent spouse, or if the spouse dies leaving dependent children, there shall be paid 80 per centum of the survivor’s pension and children’s allowance that one of the parents would have been entitled to.

• Order of Grant Entitlement: The order of entitlement to the funeral grant has been updated such that where there are no dependent children, the grant now goes to the parents of the deceased. If there are no parents, it goes to any other dependant of the deceased.

• Multiple Survivor’s Pensions: A surviving spouse shall only receive one survivor’s pension at a time. However, if the surviving spouse re-marries and the subsequent spouse also dies, he/she shall be entitled to receive a survivor’s pension from the greater pensions payable out of the two deceased spouses. The survivor’s pension is now explicitly payable at the same time with any other benefit payable to the surviving spouse in terms of the scheme.

6. Summary of Impact

These amendments by S.I. 99 of 2024 are crucial for all stakeholders:

• Employers must adjust their payroll systems to implement the new $700 maximum insurable earnings ceiling and ensure contributions are remitted correctly in ZiG at the prevailing interbank rate.

• Employees gain clarity on their pension portability, especially concerning re-employment, and improved interest calculation for refunds.

• Beneficiaries see an increase in the funeral grant amount and clearer definitions of entitlement for dependent children and surviving spouses in cases of multiple marriages.