Voluntary Contributions


Voluntary Contributions

Voluntary Contributions, as the term implies, are payments that you do not have to make to the Social Security Scheme because you are neither employed nor self-employed at the time.

If you go abroad to work for an establishment which is still fully based in the Federation, your contributions to Social Security are still mandatory for (at most) up to twelve months from your employer. After that, you will no longer be eligible or obliged to pay contributions but can then elect to pay voluntary contributions on your own behalf.

If you are between the ages of 16 and 62 and have been an employee or a self employed person with at least 104 weekly contributions on your record, and you then become unemployed, you may wish to continue to pay contributions voluntarily to ensure the growth of your contribution record. The effect of this is to help you to qualify for, or to enhance, your long term benefits of Age and Survivors Pension.

A very important consideration is that even after you may have qualified for Age Pension (by having 500 weekly contributions in the fund) any additional weekly contributions will serve to increase the percentage rating on which your pension would be based. In other words, the more contribution weeks put in, the higher would be your rate of pension. This is one great reason to add to your contribution record by paying your very own VOLUNTARY CONTRIBUTIONS.

So you can really pay if you want!

Circumstances that can give rise to Voluntary Contributions

As an insured person between the ages of 16 and 62 years, for any period that you are temporarily unemployed, or for certain periods when you are out of the Federation, you can choose to pay voluntary contributions. In this way, your contribution record continues to grow thus enhancing your long term benefits.

Here are some scenarios in which you may wish to consider paying voluntary contributions:

• Persons who are working abroad for over 12 months for an employer who is still fully based in the Federation

• Persons who are emigrating temporarily for any other

• Persons who are temporarily out of employment for any reason

• Seasonal workers who lose the opportunity to work for a certain period or periods in any year because of the nature of their field of employment. And this could be for employees and self employed persons

• Persons who retire early from their employment. There are many cases of civil servants and other such early retirees who still have some years to go before becoming 62 years of age. They can opt to pay voluntary contributions. This would enable them to increase the percentage rating of their Social Security pension, even though they would have already qualified for the pension

• Persons who interrupt their work life to pursue studies. During the period of study, you can pay voluntary contributions to maintain the growth of your contribution record thus enhancing your ultimate pension

If you find yourself in any of the situations outlined, you can make application to the Social Security Board for a Certificate of Voluntary Insurance.

Long Term Benefits Only

It is important to note that short term benefits are not available to you during the time of voluntary contributions. Voluntary contributions are meant to assist you in enhancing your pension entitlements.

One of the main conditions under which voluntary contributions are payable is the condition of not being in employment under the jurisdiction of the Federation. If you are not in employment there is no possibility of becoming entitled to the short term benefits, since such benefits are compensations for loss of earnings due to incapacity. In other words to receive a short term benefit you would have had to be working one day and then become incapacitated the next to be able claim the benefit. This situation does not present itself if you are a voluntarily insured person. This type of person is already out of work for some other reason other than the reasons of incapacity such as sickness or maternity.

Rate of Contributions

As a voluntarily insured person (or a person who is paying voluntary contributions at a time when you are not obliged to do so) you do not have to pay the same full rate of contribution that is payable on behalf of someone who is working. While the full contribution for a regular working person is at the rate of 11% percent, the voluntary contributions payable by someone who is not working is at the rate of 5% percent only. Remember the regular working person’s contribution is made up of 5% percent from the employee and 6% percent from his or her employer. In other words as a voluntary contributor you would only be paying the usual employee portion of a full contribution. This portion (5% percent) will only be allotted to cater to your long term benefit enhancement as we said earlier.

Calculation of your Contribution Amount

If you ever apply for and obtain a Certificate of Voluntary Insurance, the Social Security Office will calculate the specific amount to be paid by you. This would be based on certain specific factors.

In order for you to be eligible to pay Voluntary Contributions, you must have at least 104 contribution weeks on your record. At the point where you apply for a Certificate of Voluntary Insurance, Social Security will trace back the period of two years or 104 weeks immediately before the time you stopped working, or the time when you ceased to be eligible to pay regular contributions. Your total wages earned during that period will be added and then divided by two to provide what is called the average annual wages.

By computing 5% percent of the Average Annual Wages, Social Security will arrive at a figure that represents your rate of contributions per annum. When this rate of contributions per annum is divided by 52, the resulting figure or amount is your weekly rate of contributions.

Time Frame for Applying for Certificate of Voluntary Insurance

If you cease to be liable for contributions in any of the scenarios that give rise to being eligible to pay Voluntary Contributions, and you wish to pay Voluntary Contributions, you will need to apply for the Certificate within thirteen weeks after you last normal contribution. This is a specification of the law. If you allow that 13 weeks to pass, you would not under normal circumstances be allowed to pay Voluntary Contributions. It is important to be always on the alert and state your intentions early to get on board with Voluntary Contributions.

For Additional Information

For more detailed information on this area of Social Security or for guidance on your particular case, you may contact us.

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