Saturday, June 15, 2024
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Brunei Town

New retirement scheme replaces TAP, SCP

Rokiah Mahmud

The National Retirement Scheme (SPK) is a new scheme initiated by the Government of His Majesty Sultan Haji Hassanal Bolkiah Mu’izzaddin Waddaulah ibni Al-Marhum Sultan Haji Omar ‘Ali Saifuddien Sa’adul Khairi Waddien, Sultan and Yang Di-Pertuan of Brunei Darussalam through the Ministry of Finance and Economy (MoFE) and the Employees Trust Fund (TAP).

The new scheme will replace TAP and Supplemental Contributory Pension (SCP) schemes.

SPK is aimed at strengthening the social welfare of TAP members at retirement by taking into consideration the economic challenges and other factors.

Firstly, SPK aims to provide a better and adequate retirement income by using income replacement rate (IRR) for all groups especially the low-income group.

Secondly, with the increase of the nation’s life expectancy, SPK will continue to protect its members against longevity risk by paying up to lifetime annuity.

Thirdly, SPK provides more flexible withdrawal schemes to cater to members’ pre-retirement needs.

Additionally, SPK also addresses welfare for the deceased member’s dependent by providing extended coverage for dependents, before and after retirement.

Lastly, SPK is more inclusive towards its members, where not only employees in the formal sectors but also covers all types of employment including workers in the non-formal sectors or those who are self-employed.

Under SPK, the contribution from employee’s salary will be deposited to member’s account while contributions from employers will be collected under Retirement Account. There is no change in the contribution rate of 8.5 per cent for employee’s mandatory contribution rate.

However, the cap for maximum contribution of BND98 will be removed.

On the other hand, the employer mandatory contribution rate are: for salary BND500 and below, minimum contribution of BND57.50; for salary BND500.01 to BND1,500, the contribution rate is updated to 10.5 per cent; for salary BND1,500.01 up to BND2,800, the contribution rate is updated to 9.5 per cent and for salary BND2,800.01 and above the contribution remained at 8.5 per cent with no cap of BND98.

For withdrawals, members are allowed an unconditional withdrawal of 30 per cent from the member’s account at the ages of 45, 50, and 55, and a 100-per-cent member’s balance withdrawal at the age of 60.

Members are also able to withdraw 50 per cent from member’s account from the age of 40 for the purpose of housing which includes buying, building, repairing and renovating the house. Aside from withdrawal at the age of 60, 100 per cent withdrawal can be made to deceased member’s beneficiaries; terminal illness, incapacitation and renouncing citizenship.