What is the SCP?

The details of the Supplemental Contributory Pension (SCP) announced by His Majesty during His Birthday's Titah was released by Ministry of Finance yesterday. I have made available the 5 pages document scanned as jpg files in the last posting. You can click on each one and print that page out. It is not as clear as I would have liked, the original scans are clear, but this one is reduced resolution otherwise it will take you sometime to download. But it is legible and readable.

Based on the circular, this is what I understand SCP is all about.

What is SCP?
The SCP is supplemental to the current TAP scheme. The main objective is to ensure that everyone will be able to retire at the compulsory age of 60 with a minimum pension of $150 a month. This added to the $250 Old Age Pension will mean that everyone has $400 a month to live on for the rest of their life. The SCP also has a 'survivorship' component which means that your wife and children can benefit even after your death.

Who is in the SCP?
SCP is compulsory for everyone either on the TAP scheme or in the informal sector (self-employed).

How does the plan work?
You and your employer has to contribute. You must contribute 3.5% of your salary and your employer pays an equivalent amount. Out of that 7%, 6% goes into your SCP account and 1% goes into your survivorship account.

The minimum contribution is $17.50 a month which is based on $500 salary. If your salary is lower than $500 a month, the government will top up your contribution to bring it up to $17.50 a month. But your employer still pays a minimum of $17.50 a month.

But there is a maximum that the company has to pay. If your salary is more than $2,800, the company only needs to pay up to the salary of $2,800 a month which is equivalent to $98 a month. But you can opt to pay more so that you get a higher monthly annuity when you retire.

If you are self-employed, you have to pay $17.50 and the government in place of your non-existent employer will pay the other $17.50. You can opt to contribute more so that you also get a higher monthly annuity when you retire.

What are the qualifying rules?
You must contribute for at least 35 years starting from the day you start working.

For the transition period, that means practically everyone who are working now, the government will help you 'catch up', that is the government will pay for whatever shortage to make up up in your saving up to a maximum of $30 per month.

Whatever it is, the government will top up your contribution even if your 7% monthly payment is still insufficient to allow you to enjoy $150 annuity.

What are the survivorship rules?
If you die before reaching retirement, your wife or your husband and/or your children under 21 will get $400 a month for a period of 15 years. But if your wife or rather your widow remarries, payment will be made to your children only. If your wife dies, payment will also be transferred to your children.

If you die after your retirement, you children will benefit under a special SCP pension subject to the amount left in your account.

Comments

unsure said…
What about homemaker ? Are they qualified for SCP ? Can homemaker contribute to SCP on her own ?

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