Pensions Schemes are now implemented in Cambodia
On 4 March 2021, the Cambodian Government issued a Sub-Decree implementing a pension scheme in Cambodia (Sub-Decree 32). Prior to this Sub-Decree, only occupational risks and health care schemes were enforced.
Sub-Decree No. 32 includes the four types of pensions provided under the Social Security Law of 2019, namely pensions for old-age, invalidity, survivors and funerary allowances.
What do enterprises need to pay attention to?
Enterprises employing one or more workers will be obliged to register with the National Social Security Fund (“NSSF”) for the pension scheme within 30 days after the Sub-Decree comes into force (i.e., 3 April) unless the enterprise has already registered with the NSSF prior to 4 March 2021. All new employees will need to be registered with the NSSF for the pension scheme within three days from the date of employment whereupon those new employees will also be enrolled under the pension scheme. Employers will also be required to report periodically on the movement of personnel within its enterprise.
Employees who have been registered and have contributed for the “minimum” period of time specified under the Sub-Decree will be entitled to withdraw their contributions upon reaching the age of 60. Where an employee becomes incapacitated, the employee shall be entitled to receive the invalidity pension. Where an employee passes away but had contributed to the pension scheme for at least 60 months, survivors of the deceased will be able to apply for the survivors pension and the funerary allowance to cover the funeral costs of the deceased.
How are contributions under the pension scheme organised?
In the first five years of its implementation, an amount equivalent to 4% of the gross monthly salary of the worker will need to be contributed to the pension scheme. Of this, 2% shall be borne by the employer and 2% by the worker.
According to the Sub Decree this rate will be increased every five years.
Where an employee becomes unemployed before turning 60, but would like to continue contributions into the pension scheme, they may opt to contribute under the voluntary contribution scheme in any amount which they desire to contribute.
When will employers need to begin paying contributions?
The starting date of contribution payments has not yet been set. It will be determined by a Prakas (Ministerial Decree) of the Ministry of Labour and Vocational Training to be issued at a later date.
This alert is for general information only and is not a substitute for legal advice.