Americas
Uruguay Enacts State Pension Reforms, Raises Retirement Age
Uruguay has released several changes as part of its state pension reforms. Eligible insured employees will be able to work while receiving a pension beginning August 1, 2023. Currently, employees contribute 15% of their salaries to the pension system, of which 7.5% goes to the AFAPs (Pension Fund Savings Managers) and 7.5% to BPS (Social Security Bank). This will be changed to 10% going towards BPS and 5% towards AFAPs.
The retirement age will change from 60 to 65 years for employees born in 1977 and after. For employees born between 1973 and 1976, the retirement age will increase by one year per additional year. For example, employees born in 1973 will retire at 61, those born in 1974 will retire at 62, and those born in 1975 will retire at 63, etc. The pension reforms are an effort from Uruguay’s government to support the aging population and address increased life expectancies and a low birth rate.
Europe, Middle East, Africa (EMEA)
France Increases Retirement Age
France has rolled out a few changes as part of its pension reforms. Effective September 1, 2023, the retirement age will increase from 62 to 65 years, gradually increasing in three-month increments. Additionally, the minimum monthly old-age pension will increase by around EUR 100.
Kenya Changes Pension Contributions
Kenya has enacted changes to the employee and employer contributions to the National Social Security Fund (NSSF), effective March 2023. The government has launched two tiers for pension contributions. Tier I is for employees with a lower earnings limit, with salaries capped at KES 6,000. Tier II is for employees with salaries higher than the lower earnings limit, with a salary cap of KES 18,000. Employees and employers will both contribute 6% of an employee’s total salary for both tiers, with a total monthly contribution of KES 720 for tier I and KES 1,440 for tier II.
Malawi Enacts Pension Reforms
Effective April 1, 2023, Malawi’s government implemented several changes as part of its pension reforms.
Participation in the occupational pension program is now mandatory for all private-sector employees. Employees who are within five years of the normal retirement age of 50 can now withdraw up to 50% of their occupational pension account balance as a lump sum.
A new personal pension fund is launched to encourage additional savings for retirement. Available to all employees, the fund will allocate 40% of contributions to personal savings and 60% to pension benefits. Additionally, the government has also rolled out an employer-sponsored provident fund. These are only available to employees if the employer offers them, and early withdrawals are not allowed. At retirement, both personal pension funds and provident funds will provide benefits as a lump sum.
Monaco Launches Mandatory Retirement Fund
Monaco has launched a new retirement fund called Caisse Monégasque de Retraite Complémentaire (CMRC) for private-sector employees. CMRC will replace the retirement benefits currently offered by France’s AGIRC-ARRCO retirement plan (AA). From January 1, 2024, it will be mandatory for employees to participate in CMRC. Employees will get benefits for retirement, death, and disability, and the retirement age is set to 65 years. Administered by the Monaco Social Fund, the benefit eligibility criteria will be aligned with Monaco’s state benefits, and the employer and employee contribution rates will initially be the same as under AA. The change reflects Monaco’s effort to align benefits with its own state pension system and move away from participating in France’s pension system.
Portugal Increases Parental Leave, Expands Adoption Leave Eligibility
Effective May 1, 2023, paternity leave is increased to 28 days from the previous 20 days. Of the total leave, seven days (previously five) must be taken immediately after childbirth and the remaining days within 42 days following childbirth. Paternity leave can also be taken by the second parent in the case of adoption for the first time. Parental benefits will also apply to foster families. Both parents can take the extended parental leave simultaneously.
Slovakia Makes Changes to Three-Pillar Pension System
The Slovakia government implemented several changes to its three-pillar pension system.
First Pillar (Mandatory Pension Insurance): Effective January 1, 2023, the retirement age cap is removed for employees born after 1966, and the retirement age will increase based on life expectancy changes. A parental pension supplement is rolled out, under which old-age pensioners who have working adult children will receive a monthly supplement of 1.5% for each child’s average monthly covered earnings in an eligible calendar year. The maximum monthly benefit is EUR 21.80 per child, and both parents can receive this benefit. The duration of the survivor pension for surviving spouses increased to 24 months from 12 months.
Second Pillar (Individual Retirement Savings Account): From May 1, 2023, employees younger than 40 who are entering the workforce for the first time will be automatically enrolled in the second-pillar program, with the option to opt out within two years. The second-pillar employer contribution rate will increase to 5.75% in 2025 (instead of 2023) from the current 5.5% total monthly salary and to 6% in 2027 instead of 2024. Second-pillar employee contributions will remain voluntary. The account maintenance fee of 1% is eliminated.
Third Pillar (Voluntary Supplementary Pension Savings): Administrative fees charged by pension fund management companies are lowered to 1.15% from 1.2% of assets in 2023, and it will decrease further to 1.05% in 2024 and 1% in 2025.
Switzerland’s Canton Geneva Launches First-of-Its-Kind Parental Leave
Canton Geneva in Switzerland has launched eight weeks of parental leave. This is a first-of-its-kind leave in Switzerland, and it will be offered in addition to the existing 16 weeks of maternity and two weeks of paternity leave. The leave can be taken by either parent with the exception that if a maternity benefit has been paid to one parent, then at least six weeks must be taken by the other parent. Therefore, a maximum of two weeks can be added to the already existing maternity leave or up to eight weeks can be added to the paternity leave. The cost of parental leave compensation will be shared equally between the employee and the employer.
UK Launches Neonatal Care Leave, Carer’s Leave
On May 24, 2023, two new leaves, Neonatal Care Leave and Carer’s Leave, received the Royal Assent in the UK. The Neonatal Care Act 2023 will provide 12 weeks of paid leave to eligible parents whose newborn baby is admitted to neonatal care. This leave will be in addition to other leave entitlements such as maternity and paternity leave. The Carer’s Leave Act 2023 will provide one week of flexible unpaid leave per year to employees caring for a dependent with a long-term care need. It is expected that regulations for implementing both leaves will be released in early 2024.
Zambia New Rules for Social Insurance Withdrawal
Zambia has enacted a law that allows employees to make one-time pre-retirement withdrawals from the social insurance program—the National Pension Scheme Authority (NAPSA). Employees can withdraw up to 20% of their indexed contributions, and the withdrawal amount will accrue interest. The benefit will be paid as a lump sum. Employees must be aged 45 or older or have at least 60 months of contributions.
Asia Pacific (APAC)
Bangladesh Introduces Contributory Old-Age Pension Program
Bangladesh government has launched a new contributory old-age program called Universal Pension Scheme (UPS). Administered by the newly formed National Pension Authority, the program is available for all employees (including overseas employees) aged 18 to 50 and for those above 50 years under certain circumstances. Employees’ savings will be held in a public pension fund managed by the NPA. Employees will receive an old age pension after they reach 60 and have at least 10 years of contributions. The benefit will be based on the employee’s total contribution and accrued interest and paid out monthly for life. Program participation is initially voluntary and subject to change in the future. UPS contributions and benefits will be exempt from income taxes.
The Philippines Launches New Voluntary Provident Fund Program
The Philippines’ Social Security System introduced a new voluntary provident fund program called the Workers’ Investment and Savings Program (WISP) Plus in mid-December 2022. The new program replaces two similar voluntary programs—the Personal Equity and Savings Option for social security members paying the maximum monthly social insurance contribution and the Flexi-Fund Program for overseas Filipino employees
This program is intended to provide a flexible tax-free supplemental savings option for social security participants. There is no earnings requirement to join WISP Plus, and employees can enroll through their online social security accounts. The minimum contribution is PHP 500 pesos, and there may be a maximum amount depending on the payment method used and other legal requirements. Account balances are automatically paid to participants as lump sums when they begin receiving their final social security benefits. Participants can make early withdrawals of their accumulated savings, in part or in full, at any time after one year of participation.
