Old Age Pension
The main objective of the Retirement Pension is to guarantee income security to elderly members by providing periodic payments.
- Attainment of compulsory pensionable age of 60 or early retirement at 55 – 59 years.
- Must have made at least 180 monthly contributions to the Fund. The ILO Social Security convention No 102 of 1952 (Minimum Standards Convention) stipulates a maximum qualifying period of 30 years of contributions. However, under the NSSF the qualifying period has been set at 15 years or 180 months.
- The ILO convention sets transitional provisions to persons termed “late age entrants” to receive basic pension for shorter qualifying periods as indicated
Old Age / Retirement Pension Formula
(i) Commuted Pension (Initial Lump Sum)
formula = (1/580 x N x APE) x 12.5 x 25%
- 1/580 = Accrual Factor per Month
- N = Number of Contribution months (credits)
- APE = Annual Pensionable Emoluments (Average annual salary of the best three years out of last 10 years).
- Commutation factor = 12.5
- Commutation rate = 25%
(ii) Monthly Pension
formula = (1/580 x N x APE) x 75% x 1/12
Monthly pensions for qualifying members
- Initial Lump sum paid immediately before starting pension which is equal to 25% of the calculated annual pension times 12.5
- Old age special Lump sum for non qualifying members i.e. the average of the 60 months contribution times the number of credits.
- Minimum Pension is 40% of the lowest Sectoral Statutory Minimum Wage.
- Maximum Pension is 72.5% of the Annual Pensionable Emoluments.
Purpose of the Conversion formula
- To obtain pension credits for founder members of NSSF
- To adjust the variations of contribution rates
- Takes care of the effects of inflation by applying the 1.5 factor