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National Pension Scheme Act No. 7 of 2015 provides as follows:

18. (1) Subject to the provisions of this Act, a member shall retire upon attaining pensionable age. (2) A member may retire on attaining the age of— (a) fifty-five years if, twelve months before attaining that age, the member notifies the contributing employer of the member’s intention to retire at that age; or
(b) Sixty-five years if, twelve months before attaining the pensionable age, the member notifies the contributing employer of the member’s intention to retire at the age of sixty-five years and the employer approves the retirement. (3) A member who retires in accordance with subsection (1) or (2) and has made not less than one hundred and eighty monthly contributions shall be paid a pension.

Three elderly men have approached you having read the above section; they inform you that they have been working for Chimutengo Limited for the past 12 years under a 3 year contract which would be renewed each time. During the last contract of 3 years when in the 2nd year, Management wrote a memorandum advising all those under the 3 years employment contract to change to permanent employment.

Upon writing to express interest to become permanent employees these 3 elderly men where informed that as a result of the change they will loss their gratuity due to this change, they proceeded to accept.

After working for 3 years under the permanent contract a memo was return to all works requesting them to notify the employer a year before retirement age.

These 3 elderly men are as follows in their age, A is 54 years, B is 56 years and C is 59 years old. After apply the instructions in the memo these 3 men are all retired based on section 18 of the act above.

The 3 have now approached you to advise them on what is the correct position on retirement, proceed and advise.

1 answer

Based on the information provided and the provisions of the National Pension Scheme Act No. 7 of 2015, we can analyze the retirement situations of the three elderly men (A, B, and C) as follows:

Key Provisions from the Act:

  1. Pensionable Age:

    • Members retire upon attaining pensionable age as defined in the Act.
    • A member can specifically retire at age 55 after notifying the employer 12 months prior, or at age 65 with 12 months notice and employer approval.

  2. Contribution Requirement:

    • A member must have made not less than 180 monthly contributions to qualify for a pension.

Individual Cases:

  1. Member A (Age 54):

    • Member A is currently 54 years old and has completed 12 years of employment. This means he cannot retire immediately since he has not yet reached the age of 55, the earliest retirement age without employer approval.
    • Advice for A: He must continue to work and wait until he turns 55 to notify the employer of his intention to retire. He should ensure that he has at least 180 contributions by the time he retires.

  2. Member B (Age 56):

    • Member B, at 56 years old, is eligible to retire at this age since he can notify the employer of his intention to retire 12 months in advance.
    • Since he has notified the employer and if he meets the contributions requirement (180 months), he can proceed with retirement under the provisions of the Act.
    • Advice for B: Confirm that he has made at least 180 monthly contributions to ensure pension eligibility. If so, Member B can retire.

  3. Member C (Age 59):

    • Member C is also eligible to retire since he is 59 years old. He can notify the employer of his intention to retire, which he appears to have done.
    • Like B, if he meets the requirement of having made at least 180 monthly contributions, he can retire.
    • Advice for C: As with Member B, ensure that he has sufficient contributions to qualify for a pension. If so, Member C can also retire.

Conclusion:

  • For Member A: He needs to wait until he turns 55 and ensure compliance with the contribution requirement. At that point, he should notify the employer accordingly.

  • For Members B and C: They should confirm that they have made the necessary contributions. If confirmed, they are entitled to retire based on the pension scheme regulations. They have followed the instructions in the memo correctly by notifying their employer a year in advance.

Additional Recommendations:

  • It would be beneficial for all members to confirm their contribution records with the employer or the pension scheme to ensure that they qualify for the pension.
  • They should keep a written record of their retirement notifications to the employer for their future reference and any necessary follow-up.