The NASSIT Scheme and the Organisation
The National Social Security and Insurance Trust (NASSIT) is a statutory public Trust set up by the National Social Security and Insurance Trust Act No.5 of 2001 to administer Sierra Leone’s National Pension scheme.
The Trust was established to provide retirement and other benefits to meet the contingency needs of workers and their dependants.
The core functions of the Trust are:
· Registration of employers and employees;
· Collection and recording of contributions;
· The maintenance of records on contributions and insured earnings;
· Compliance and enforcement procedures;
· The reception and assessment of benefits claims;
· The calculation and payment of benefits.
Main features of the Scheme
· The scheme is contributory: it is financed from contributions by employers and employees;
· It is a defined benefit social insurance scheme based on partial funding since contributions cannot pay for benefits in perpetuity;
· Surplus funds not required now for benefit payments are invested;
· The scheme is portable: credits are transferable from one workplace to another. Concurrent contributions enhance benefits received at the onset of contingencies.
First and current law:
2001 (National Social Security and Insurance Trust) implemented in 2002
Type of Programme:
Social insurance system
Coverage is for all employees in the public and private sectors. The self-employed can be covered on a voluntary basis.
Source of funds:
Insured person: 5% of earnings
Employer: 10% of payroll
The self-employed contribute 15%
Membership is mandatory for all workers with an employer-employee relationship. It is mandatory for all employers to ensure that their workers are registered with the scheme. For the self-employed, membership is voluntary.
The three contingencies covered by the scheme are Old age, Invalidity and Death
Old age pension: Age 60 (men and women) with at least 15 years of insurance coverage
Invalidity pension: Total incapacity for any work and younger than age 60 with at least five (5) years of contribution of which 12 months’ contributions were paid in the three (3) years preceding the onset of invalidity. The disability must be assessed by the Medical Board.
Survivor pension: The insured person met the qualifying conditions or was receiving an old age pension or invalidity pension or had at least five (5) years of contributions of which 12 months were paid in the three (3) years preceding death.
Amount of Benefits
A. Old Age:
Ø Pension: 30% of the average monthly earnings for the first 180 months of contribution or earned credits, plus 2% for each additional period of 12 months of contribution or earned credits. Average earnings for calculating the pension is defined as average earnings of the best five (5) years. The pension cannot exceed 80% of the reference earnings. Minimum pension is equal to 50% of the minimum wage.
For early retirement, the pension calculated above is reduced by 4% for each year below age 60.
Ø Gratuity: A lump sum equal to 12 months of initial pension is paid as gratuity on the retirement of each person.
Ø Pension: 30% of the average monthly earnings for the first 180 months of earned credits, plus 2% for each additional period of 12 months of earned credits. The contribution period is increased by six (6) months for each year between the commencement of the disability and age 60. Average earnings for calculating the pension is defined as average earnings of the best five (5) years. The pension cannot be less than 50% of the minimum wage.
Ø Grant: 1.5 times average monthly earnings for every 12 months of paid contributions
Ø Widow or widower: 40% of the participant’s pension (the contribution period is increased by six (6) months for each year between the death and the age 60). If more than one widow, the pension is shared equally. The pension ceases on remarriage. If a widow remarries or dies, her part is reallocated to the other widows, if any.
Ø Orphan: 60% of the participant’s pension. The pension ceases at age 18 or 23 if in full time education or at death if the dependant is disabled. If the deceased leaves no widow or widower, the pension is reallocated to the dependent children. A single child cannot receive more than 60% of the participant’s pension. If the child ceases to be a dependent child, his pension is reallocated to other dependent children, if any.
Ø Lump sum: If the participant leaves no widow or widower or dependent children, a lump sum equal to 12 months of survivor’s pension is paid to the participant’s surviving parents who are pensioners or employed (if the surviving parents are not pensioners or are unemployed, the number of months is 24.
Ø Grant: 1.5 times average monthly earnings of the deceased for every 12 months of paid contributions. This amount is shared by all the dependants.
Indexation is according to increase in employment earnings as reflected in the funds of the Trust.
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Newspaper in Freetown, Sierra Leone.