Legal news update

New Pension Includes Private Sector

New Pension Includes Private Sector.(via    Addis Fortune .)

Employees of private companies and non-governmental organizations(NGOs) are to be included in the national pension fund as of July 8, 2011, the Ethiopian Private Companies’ Workers Social Security Agency announced at its headquarters on Friday, June 10.

The new proclamation on the pension of private company workers, which came into effect on Thursday, June 9, specifies the percentage of salaries to be paid to the pension fund by private companies (employers) based on the salary of individuals working for the companies (employees).

As of July 8, employers will contribute an equivalent of seven per cent of the employee’s salary supplemented by five per cent from employees. This will be followed by annual progressive increments to eight per cent, nine per cent, and 11pc for employers, while the contribution of employees will increase to six per cent and seven per cent, over the next two years.

Employees of private companies have to work for at least 10 years to be eligible for the pension fund when they retire, according with the new proclamation.

Upon retiring, the monthly pension they receive would be calculated using 30pc of their gross salaries of the last three years of service. For each year worked, exceeding 10 years, this amount is increased by 1.25pc.

This would benefit those whose remuneration increases with time, and through use of this scheme, an employee’s pension would eventually reach up to 70pc of her gross salary, according to the proclamation.


Categories: Legal news update

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