Mauritius is one of the most diverse pension system around the universe. In fact, it has all the pillars which are set up under the World Bank get downing with the fiscal facets to the non-financial facets. However, the most distinguishing characteristic of the state is its ability to supply a non-contributory cosmopolitan pension strategy.
The non-financial facets can be the advantages and installations offered by the formal and informal system which are given to the pensionaries or future- pensionaries in footings of services. The illustrations of non-financial facets installations given by the CPF is to supply place ownership, pre-retirement investings, life, place and wellness insurance and others like loans for third instruction.
In this subdivision, the Mauritian pension system has been divided into the World Bank Pension System Conceptual Framework. That is, the Mauritian pension system will be segmented into non-contributory, contributory, and voluntary strategies.
3.1.1 Actual Pension System of Mauritius
Non-contributory strategies available are soon Basic Pensions and the Public Service pension ( known as Civil Service Pension Scheme ) and the Statutory Bodies Pension Fund. The contributory strategies involve chiefly the National Pension Fund ( NPF ) , National Saving Fund ( NSF ) . The voluntary strategies involve pension strategies set up by insurance companies or employers ( Personal pension strategies ) , the Sugar Industry Pension Fund ( which is managed by a Board, under Section 19 of Sugar Industry Pension Fund Act ) and Individual nest eggs.
Refering the last pillar which is fundamentally a non fiscal pillar, in Mauritius, there is the Health and Housing policy which are available to pensionaries and members of a contributory fund.
3.2 Components of Mauritanian Pension System
3.2.1 Basic Pensions
Basic Pensions are by and large financed from general revenue enhancements and are accounted in the authorities ‘s statement of Outgo of the Consolidated Fund[ 1 ]. Examples of basic pensions are the Basic Retirement, Basic Widows, and Basic Invalid pensions.
3.2.2 National Pension Fund
The NPF is a compulsory defined benefit strategy, which has been created in 1978 and ruled under the National Pension Act 1976. The demand to maximise return, need for security, demand for liquidness, and need for national development are the four investing aims that the Investment Committee is seeking to equilibrate.
The standard part rate is set up at 9 % of net incomes, employers- 6 % , employees-3 % . However, most employees in the sugar industry have their part rate valued at 13.5 % , employer-10.5 % and employee-3 % . It is of import to foreground that public retainers and every low income earners are excluded from the compulsory part, which means that they do non have contributory and hurt pensions granted to members of NPF merely. The pay-out benefits will depend on the points which have been accumulated through-out the old ages until retirement.
3.2.3 National Saving Fund
NSF, on the other manus is a defined part strategy ( contributed by the employer ) whereby at retirement, a ball amount is paid to the retired member of NSF. Previously known as the Employee Welfare Fund, it is set up under the National Saving Fund Act 1995. The part rate is really amounted to 2.5 % of the employee ‘s income which is entirely contributed by the employer. As compared to NPF, civil retainers are included in this strategy.
One of the chief unfavorable judgments related to NPF and NSF is that they investing made is non plenty diversified. For illustration, for NPF/NSF 2011, investing in local authorities bonds has amounted to 63.2 % and 80.7 % out of the sum portfolio which evidently is beyond sensible[ 2 ].
3.2.4 Statutory Bodies Pension Fund and Civil Service Pension Scheme
The pension strategies under Statutory Bodies Pension fund Act 1978 are required to be administered by SICOM ( State Insurance Corporation of Mauritius ) . This strategy is on the passage procedure towards a conducive strategy. Based on Statutory Bodies Pension Fund Act, officers[ 3 ]who are appointed on or after 1 July 2008 have to lend to the strategy.
Civil Service Pension Scheme has been revealed to be “ excessively generous ” by the World Bank. “ The replacing rate of a private sector worker will hold a replacing rate of 53, a civil retainer will have a replacing rate of 87 ( 20 from BRP ) ” World Bank ( June 30, 2004 ) . The outgo on CSPS amounted at Rs 710 m in 1998, increased to Rs 788 m in 1999, Rs 889 m in 2000. In 2001, the outgo increased by about 37 % ; 2006/2007 ‘s CSPS outgo grew by around 12 % amounted to around Rs 354 m ; 2010/2011 ‘s costs increased by Rs 113 m.
3.2.5 Pension Schemes, set up by insurance companies or any other authorised companies
Pension Schemes, set up by insurance companies, any other authorised companies or employers need the blessing and supervising of one of these establishments: the Registrar of Association under the Employees Superannuation Fund Act 1954 ; the Mauritius Revenue Authority under Income Tax Regulations 1996 ; and the Financial Services Commission under the Financial Services Act and the Trusts Act. The private pension sector has really of around 1500 strategies under MRA, about 50 under Registrar of Association and around 15 under the Trusts Act.
However, it is of import to observe that a Private Pension Act is presently under dialogue. Harmonizing to Aon Hewitt, one of the of import consultative houses in pension system in Mauritius, there will be several benefits to the new passage to come. Amongst others, the regulative aims will be maintained in a just, safe, and efficient manner ; promote assurance ; and just intervention to donees.
3.2.6 Sugar Industry Pension Fund
Consequently to the Sugar Industry Pension Fund Act, which is fundamentally a defined contributory strategy ( part rate out of the employee wage ) , there are several conditions to be able to go members of this strategy. Amongst others, the conditions are:
-The need that the employer is being straight related with the procedure of sugar industry as per the act.
-The employee should non be listed in the passage subdivision 4 ( 3 )
3.3 Challenges in front
From a seminar on 22nd August 2012, “ Deductions of the new private pension strategy statute law ” , undertaken by the Swan Group, it has been indentified 4 of import challenges that the pension industry in Mauritius is really facing:
1 ) Increasing Life Expectancy. In fact, life anticipation is increasing all over the universe, non merely in Mauritius. However, the nucleus jobs is the increasing spread between the retirement age and life anticipation of the single, where-by the inability to calculate, with some grade of truth, the life anticipation of a specific person
2 ) Lack of involvement from younger people to put for the hereafter. That is they prefer to pass more for the current benefits.
3 ) There is a belief that the employer will supply the pension ( which may non be the instance )
4 ) Lack of willingness to understand the pension system ; how it works and so on.
3.4 Basic Retirement Pension ( BRP )
Since the research methodological analysis that will be based on accessing BRP, it will be worthwhile to how an overview the BRP in Mauritius.
In 1950-1958, policymakers were looking to cut downing their financial costs. They have introduced an single income trial excepting 20-25 % , comparative to the cosmopolitan system. The means trial at that clip was traveling to be harsher whereby informal sector ( like possible support from girls and boies ) were taken into history. Honest citizens, at that clip, were shocked to see that they had their pensions reduced. They rapidly learned to unwrap information to avoid the cut-off on their pension. In 1958, the testing was abolished and the system returned back to catholicity.
In 1965-1976, for the 2nd clip, a mild income trial was introduced. The procedure is about registering and paying revenue enhancement disqualifies people to obtain their pension support from the authorities. The system was non as intrusive and there were non so much corruptness as the old 1. However, the job was that the inducements to unwrap or falsifying information had non been resolved.
For the 3rd clip, on August 2004, an income trial on BRP was imposed. In this one, pensionaries ( & lt ; 90 Yrs old ) with one-year income greater than Rs 208,000 had their pensions reduced by 50 % *1/12 of the extra sum which was above Rs 208,000. However, the party at that clip lost the national elections of July 2005, and the new authorities eliminated the targeted attack once more back to the cosmopolitan system.
In 2008, the authorities has introduced a general gradual addition in retirement to 65 old ages old. However, for BRP the eligible retirement age has been affixed to 60 old ages.
The general eligibility demands to hold entree to the BRP are:
Every Mauritanian Citizen aged 60 or supra ;
The individual should hold resided in Mauritius for an sum of 12 old ages ( on or after its 18 old ages old )
The abode making does non use to Mauritian citizen aged over 70 or over.
Non-citizens must hold resided in Mauritius for at least 15 old ages on norm ( on or after its 40 old ages old )
Those who are eligible to BRP as at 2013, the sum every bit at 2012 has been adjusted to counterbalance for the addition in cost Doctor of Optometry life. Harmonizing to the budget 2013, “ As from January 2013, the monthly BRP will travel up to 3,494 rupees for the pensionaries aged 60 to 89
old ages, to 10,404 rupees for those aged 90 to 99 old ages and to 11,807 rupees for centenarians. ”
This represents on norm an addition of 4.3 % .
3.4.3 Collectible Sum
Once eligible, the sum receivable would be as per the budget indicates.
For the budget 2013, the sum collectible to those eligible is indicated below
& gt ; 100