Government has approved the Seychelles Pension Fund’s proposal for an increase in members’ mandatory contribution. As of July 2017, all employees will pay 1% additional contribution from their gross monthly salary. This will be further enhanced by a 0.5% increase by employers in January 2018 and a further 0.5% in January 2019. This means that as of July 2017, all members of SPF will be contributing an aggregate of 3% employee mandatory contribution matched by 2% employer contribution. Subsequently employer contribution will increase to 2.5% in January 2018 while employees will maintain the 3% monthly contribution, followed by 3% employer contribution in 2019 which will be the same as employee contribution of 3%.
The increase in contribution was recommended by SPF’s actuary after their 3 year evaluation of the sustainability of SPF and was a subject discussed at great length at the SPF’s symposium in January 2017. The recommendation is supported by the World Bank Social Protection Specialist and the pension expert from the Financial Services Authority as the current rate of contribution of 4% can only sustain SPF for a further 11 years, taking into consideration the rate of pensions and benefits being paid, and the expected increase in number of pensioners and dwindling contributors in years to come. The plan is to gradually increase contributions of both employer and employees to 10.5% by the year 2035 with one percent increase every 5 years.
To note that the current 4% monthly contribution is the lowest in the world, and that contribution in the region is around 10%.
The change in contribution was approved by the National Assembly as part of the budget 2017 and will be gazetted next week under SPF’s Regulations.