Cambodia Introduces New Pension Scheme

In March 2021, Cambodia introduced Sub-Decree 32 which implements a new pension scheme in the country. Before Sub-Decree 32, only schemes related to occupational risks and healthcare were enforced.

Under the current social security scheme, employers with one or more employees must register themselves and their employees with the National Social Security Fund (NSSF) within 30 days of operating. The NSSF provides three schemes:

1. Occupation risk insurance – work-related accidents;
2. Healthcare insurance; and
3. Pension scheme.

The NSSF first implemented the occupational risk insurance scheme in 2008 followed by the healthcare insurance in 2016. In 2019, the government introduced the Social Security Scheme, but its implementation has been pended.

Sub-Decree 32 introduces the mechanism and procedures, contribution rate, and benefit claim for the four types of pension schemes provided under the decree. These are:

• Old-age pension;
• Disability pension;
• Survivor’s pension; and
• Funeral allowance.

What are the conditions for eligibility?

Old-age pension

To be eligible, the NSSF member must be registered under the pension scheme, must be at least 60 years of age, and have made contributions to the pension fund for at least 12 months.

Disability pension

To be eligible, the NSSF member must be registered under the pension scheme and have made contributions to the pension fund for at least 60 months before becoming disabled.

Survivor’s pension

The benefits are given to family members on the death of an NSSF member who has made contributions to the pension fund for at least 60 months.

Funeral allowance

The allowance is given only on the death of a person who is eligible for the old-age or disability pension.

Sub-Decree 32 stipulates that companies that have not registered with the NSSF must do so within 30 days of the effective date of the decree and that their employees must also be registered within three days of commencing employment.

What are the components of the pension scheme?

The pension scheme consists of two components:

1. The compulsory pension scheme; and
2. The voluntary pension scheme.

The compulsory scheme

Under the compulsory scheme, the contribution rate will be borne 50 percent by the employer with the remaining 50 percent by the employee.

The contribution rates will be done in three states, as follows:

• 1^st stage – four percent of the contributable wage (wages before tax deductions) whereby the employer will contribute two percent and each employee two This will be implemented for the first five years of the scheme;
• 2^nd stage – eight percent of the contributable wage, whereby the employer will contribute four percent and each employee four This will be implemented after the first stage is completed and for five years; and
• 3^rd stage – there will be subsequent increases of 2.75 percent every ten years.

Employers are obligated to remit their pension contributions to the NSSF by the 15^th of the following month and the contribution report — which includes the number of employees — must be submitted on the 20^th of the following month.

 

The voluntary scheme

NSSF members can also request to participate voluntarily in the pension scheme if they meet the following conditions:

• The applicant is under the age of 60 and unemployed, but is still able to make the pension payments;
• The applicant is under the age of 60 and wishes to pay the monthly contribution to receive a much higher old-age pension than the amount they are receiving under the compulsory pension scheme; or
• Have income higher than the wage ceiling.

The rate of the contribution under the voluntary scheme must be equal to or greater than that paid under the compulsory pension scheme.

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