The main objective of the Retirement Pension is to guarantee income security to elderly members by providing periodic payments.
NSSF applies the following conversion formula to convert the member’s NPF balance as at June 1998 into NSSF credits.
N = 1.5*B/C
Where: B = Member’s Balance as at 30/6/1998
C = Last contribution before July 1998
1.5 = conversion factor
If N is greater than 108, (108 is the number of contributions since July 1989
when the rate of 20% started), then:-
N1 = 108 + (N -108)
Then add contributions after June 30, 1998
Pension = [1/600*180+0.015(N - 15)]*AIME
Where: N = complete years of service period (contribution period)
AIME = Average Insurable Monthly Earning ( Average Monthly Earning/salary of the last best 5 years)
Monthly pensions for qualifying members
The following is an example to determine Old Age Pension for Mzee Mwendapole.
1. Assume Mzee Mwendapole has qualified for old age pension with the following data;
2. Assume Mzee Mwendapole had Average Monthly Earning of Tshs 360,000 then his monthly pension would be 360,000 x 30% = Tshs 108,000 and his initial lumpsum would be 108,000 x 24 = Tshs 2,592,000
3. Assume again Mzee Mwendapole had attained 240 credits then his applicable percentage shall be 30% + (1.5%*5 years) = 37.5%. Hence his monthly pension would have been Tshs 120,000 x 37.5% = 45,000 (for assumption 1 above which is still below minimum pension) and Tshs 360,000 * 37.5% = 135,000 (for assumption 2 above). His initial lumpsum would be Tshs 1,080,000 for assumption 1 and Tshs 3,240,000 for assumption 2.
4. If Mzee Mwendapole had retired at the age between 55 – 59 years his applicable percentage for pension is reduced by 0.5% for every year retired before 60 years and his calculated pension MUST be above minimum. Assume he retired at the age of 56 years, he shall not qualify for pension for assumption 1 but his shall qualify for reduced pension for assumption 2 and 3 above. His reduced pension shall be Tshs 360,000 * (30% - 2%) = Tshs 100,800 for assumption 2 and Tshs 360,000 * (37.5% - 2%) = Tshs 127,800 for assumption 3. His initial lumpsum shall be Tshs 2,419,200 for assumption 2 and Tshs 3,067,200 for assumption 3