On July 5, 2022, Cambodia issued regulations implementing the pension system of the National Social Security Fund (NSSF). Pension contributions will begin on October 1, 2022.
The implementation is detailed in Prakas No. 168 on the Procedures and Formalities for Registering Enterprises, Institutions, Workers, and Employees, and Contributions for all Persons Defined by Provisions of Labor Law (Prakas No. 168) and Prakas No. 170 on the Commencement Date of Pension Contribution for the Compulsory Contribution and Voluntary Contribution.
Registration and Benefits
All employees and employers previously registered with the NSSF for health and accident insurance are automatically enrolled in the pension scheme, with no additional registration necessary. Both new and existing nonregistered employers with at least one employee must register their company with the NSSF within 30 days of Prakas No. 168 entering into force or on the date of establishing the company. Nonregistered employees are required to be registered with the NSSF no later than three days from the start of their employment.
The NSSF pension system features four categories of benefits: old-age pension, incapacity/disability pension, survivor pension, and funerary benefits. The amount of benefits available to an NSSF member is based on a percentage of the person's total contributions and the period of those contributions.
The pension contribution is a joint responsibility shared equally by employers and employees. The rates of contribution will increase in steps as the NSSF pension program is phased in. The phases are as follows:
- Phase 1: In years 1–5, total compulsory pension contributions will amount to 4% of employee wages from the starting date of initial contribution.
- Phase 2: In years 6–10, total compulsory pension contributions will amount to 8% of employee wages.
- Phase 3: After the pension program has been in place for 10 years, total compulsory pension contributions will increase to 10.75% of employee wages. There will be an additional increase of 2.75% after each subsequent 10-year period elapses. (No information has been provided on whether there is a cap on future increases.)
The monthly wage used for the NSSF contribution calculation is capped at KHR 1,200,000 (approx. USD 300).
Monthly pension contributions must be processed no later than the 15th day of the following month. Therefore, for example, pension contributions for March must be paid by April 15. Employers that wish to pay contributions annually must submit a request to the NSSF for approval.
Employers are released from the obligation for making compulsory contributions for registered employees who are 60 years of age and older. However, registered employees 60 years of age and older as of July 1, 2022, can make voluntary contributions by submitting a request to the NSSF within 12 months of Prakas No. 168 entering into force (i.e., until July 5, 2023).
The NSSF pension scheme also allows for voluntary contributions to be made if the NSSF member is:
- Unemployed, under 60 years of age, and financially able to continue making contributions;
- Over 60 years of age and intending to continue making contributions; or
- Earning income higher than the wage ceiling of the compulsory system.
Voluntary contributions increase the total contribution of the NSSF member, and will ultimately increase future pension benefits available to them. Contributions made under the voluntary system must be equal to or greater than the contributions made under the compulsory framework, and individual contributors should coordinate their voluntary payments with the NSSF directly.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.