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Amount of pension contribution in the new Ethiopian pension laws

One of the significant changes introduced by the new Ethiopian pension laws is the substantial increase in the amount of pension contribution by the beneficiary and the government/employer. Until June 2011, only the public sector was covered by the pension scheme. Starting from July 2011 those (employees and employers) in the private sector will start making a contribution following the first private organization employees pension law. So what is the amount to be contributed by employees, employers and the public organs (the government)? The following table summarizes the contributions to be made from each respective party according to the proclamation no.714 and 715.

In the previous (now repealed pension law) the amount of pension contribution by public servants including military and police officers was 4% of their gross salary. However, there was a significant variation in the contribution to be made by the government for public servants as compared to the contribution to military and police officers.

According to article 5 and 6 of the repealed Public Servants’ Pensions Proclamation No. 345/2003 the contribution of the government to public servants pension was 6% whereas it was 16% for military and police pension.

The same variation is also reflected in the new public servants proclamation no 714/2011. The 16% government contribution has now risen to 25%, almost 1/4th of the gross salary of military and police officers. On the contrary the government contributes only 7% for public servants.

Just refer to the following table for the specific percentage of contribution by each of the parties with the responsibility of pension contribution under the new pension laws.

Note:

  • NA= Not Applicable
  • In order to calculate 1st 2nd 3rd and 4th year the time to start is July 1 2011
  • The percentage is calculated based on the gross salary of the employee i.e. before deduction of tax and other encumbrances. Salary does not include hardship allowance, transport allowance, house allowance or other related benefits attached with certain position.

Download    pension contribution table

14 replies »

  1. Please, would you post the recent law concerning Provident fund & severance payment. If a person is provident fund user worker and terminate the contract, can he get severance payment?

  2. HI I HAVE ONE BIG QSETIONS i.e HOW MUCH THE TIME OF CIVILE SERVICE WITH IN THE MONTH …22 OR 30 ?

  3. HI Abrham
    I really appreciate your kind service.
    As per the private organization Employee pension proclamation 2011 , one can shift from provident fund to pension scheme. And it has been also stated one should repay some amount of money. Here my question is to what extent the employee is expected to repay from the start of 2011? or Does the employee has the right to decide when to start the pension scheme when the employee shit from PF to pension?

    I kindly expect your clarification
    With many thanks

  4. This pension law is not hard ! i.e may not have negative impact on life ! This may have contribution to implement the renaissance grand development plans . Every law has a logic behind it .The main point is this pension income should be managed properly because it may contribute a lot for the contributor and the nation at large . Mainly developing nation depends on their internal financial source to implement their program . such mechanism also helps to protect their sovereignty in different ways !
    From A.A , LL M student

  5. Hello, I have doubt on pension contribution of z employees of a private organization. According to my knowledge, z contribution for contract employees is on z base of their willingss of both parties/Employees &employers/ of private organizations. Since they are considered as temporary workers for Zat company. Please, give Ur brief explanation on z case if u got my idea.

  6. Please See it again!!!!!

    This Law is very difficult specialy for those who are graduated from Universities. Because Their Salary doesn’t cover their monthly expenses. This Means,Those who are graduated with BA or MA May recieve monthly salary of Less than those who are graduated from a TVET college or any Holders of Diploma.

    Please This thing is the most important one’s that must be corrected by the governments.

    Thank You

  7. MAY YOU HAVE TO THINK THAT THE INFLATION IN THE MARKET TO ADOPT ALL ISSUES AROUND CIVIL SERVANT RATHER DROPPING THE REGULATIONS. I WOULD LIKE TO RECOMMEND AND SUGGEST YOUR SALARY SCALE CURRENTLY! ITS VERY NOT FAIR, ONE WHO WORKS ALL DAYS SHOULD HAVE GET HIS / HER ENOUGH COMPENSATION. HOW ONE PERSON LEARNT ATLEAST FIFTY, SIXTY … AND GET SALARY EVEN NOT COVER HIS / HER MONTHLY EXPENSES. OMG!!! PLEASE *1000 REVIEW IT YOUR LAWS N PROCLAIMATION RELATED TO THAT ALL.

    THANKS,
    YOUR SINCERELY!

  8. Please post or send me the new proclamation no.714/2011 to provide for public servants’ pention.

    Thankyou

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